Annual Report 2014
Year Ended March 31, 2014

Profile
The Ashikaga Holdings Group is comprised of the five companies of Ashikaga Holdings, Ashikaga Bank andthree other consolidated subsidiaries and primarily provides banking services and other financial services
including credit card services. The Ashikaga Bank is a regional bank that operates mainly in the four prefecturescomprising the North Kanto area, primarily Tochigi Prefecture, where its head office is located, as well as
Saitama, Gunma, Ibaraki prefectures and hereafter, “our region.”
As of March 31, 2014, the Bank had a total balance of deposits and negotiable certificates of deposit of¥5,183.9 billion, a balance of loans and bills discounted of ¥4,007.3 billion, and a capital ratio of 8.68%. Its branch
network consisted of 153 branches and sub-branch-level offices.

Corporate Philosophy
All of Ashikaga Holdings and Ashikaga Bank’s actions are rooted in the Group corporate philosophy, comprising
the three concepts of our mission, our business approach, and our code of conduct.
Based on our corporate philosophy, we are determined as a bank to justify the trust and meet the expectations of our customers in the community, in our role as a comprehensive financial institution for our region.

Our mission— To contribute to the creation of affluence —As a comprehensive financial institution for our region,
the Ashikaga Bank continues to contribute to the generation of affluence for all in the regional community.

Business approach— In harmony with our region —With a customer-oriented focus,
the Ashikaga Bank is committed to operational soundness in harmony with our region.

Code of conduct— With pride in our hearts and a smile on our faces —In full awareness of our mission and role,
we will tirelessly meet our customers’ expectations and justify their trust,with self-improvement as our watchword, with pride in our hearts and a smile on our faces.

Contents
P.1

Financial Highlights (Consolidated)

P.12-14

Corporate Governance

P.2-3

A Message from the Management

P.15-18

Risk Management at the Ashikaga Holdings Group

P.4-5

Area of Operation

P.19-21

System of Legal Compliance at the Ashikaga Holdings Group

P.6-7

Earnings Highlights

P.22-51

Financial Data

P.8-9

Efforts to Promote Relationship Banking

P.52

Corporate Data / Organization

P.10-11

Corporate Social Responsibility Activities

P.53

List of Directors and Executive Officers / Stock Information

Financial Highlights (Consolidated)
Millions of Yen*

Thousands of U.S. Dollars**

2014

2013

2014

¥5,612,355¥5,434,144$54,531,243

Cash and due from banks

344,369

197,870

3,345,992

Loans and bills discounted

3,958,083

3,775,974

38,457,863

Securities

1,176,469

1,186,910

11,430,916

Deposits

4,943,137

4,745,811

48,028,926

Total equity

241,135

279,343

2,342,940

Common stock

117,495

67,5101,141,620

Total income¥  108,073¥   98,612$ 1,050,075

Total expenses

80,15180,222778,779

Net income

24,314

15,405236,248

Years ended March 31
At year-end:
Total assets

For the year:* Yen amounts have been rounded down to millions of yen.
** U.S. dollar amounts are translated, for reference only, at the rate of ¥102.92=$1 effective on March 31, 2014.

Total Income

Total Expenses

Net Income(¥ billion)(¥ billion)(¥ billion)

120 118.0

100

30

Years ended March 31

105.5
100

Years ended March 31

101.2 98.6

108.0

92.6 90.1

Years ended March 31

84.2

80

80.2 80.1

25

25.4

24.3

20

80
60

15.9

17.1

15

60

15.4

40
10

40
20

20
0

10

11

12

13

14

0

5

10

11

12

13

14

0

10

11

12

13

14

ASHIKAGA HOLDINGS CO., LTD. Annual Report 20141

A Message from the Management

Satoshi Fujisawa

Masanao Matsushita

Chairman and Chief Executive Officer
Ashikaga Holdings Co., Ltd.

President and Chief Executive Officer
Ashikaga Holdings Co., Ltd.
The Ashikaga Bank, Ltd.

We would like to express our greatest appreciation to ourto by a pickup in capital investment, a surge in homestakeholders for their continued support and patronage

investments caused by the last-minute demand priorof Ashikaga Holdings and the Ashikaga Bank (hereinafter,to the consumption tax increase, and stable consumer“Ashikaga Bank” or “the Bank”). On December 19, 2013,

spending after having bottomed out.

Ashikaga Holdings listed on the first section of the Tokyo

Similarly, in the local economy of Tochigi Prefecture,

Stock Exchange. This is truly thanks to the cooperation

capital investments showed signs of improvement andand support from all of our stakeholders.

home investments and consumer spending were stable
after having bottomed out, resulting in a moderate

During the fiscal year under review, in the wake ofvarious economic measures and greatly expanded

recovery.
Under these circumstances, the Ashikaga Holdings

monetary easing by the Bank of Japan, the JapaneseGroup (hereinafter, “the Group”) focused on fulfilling

economy continued its modest recovery as attested

a smooth financial intermediary function in the local

Outline of New Medium-term Management Plan

2

Name

Challenges 120— Valiant Challenges Toward 120-year Anniversary of Foundation

Term

From fiscal 2013 to fiscal 2015 (3 years)

Vision for the Bank

• Reliable and trusted partner for our customers• Convenient and assured bank
• Contribute to regional development and growing together

Goals of Medium-termManagement Plan

• Augmenting profitability through commitment to the region• Listing on the Tokyo Stock Exchange

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

community and offering financial services that meet its

Interpark Branch, and it was relocated in a new building,customers’ needs based on its medium-term manage-with the Loan Center on the same premises.

ment plan “Challenges 120 – Valiant challenges toward

As a consequence of these initiatives, on a consol-

120-year anniversary of foundation,” which started on

idated basis, ordinary profit for fiscal 2013 increased

April 2013.

¥9,574 million year on year to ¥28,271 million. Net

In corporate banking, we made greater contact withcustomers and actively extended new loans. Further,income increased ¥8,909 million year on year to ¥24,314
million.

we held business confabs and established the Tochigi

Although the economy has recovered modestly, theNetwork Fund, a fund to revitalize SMEs that is jointly

regional economy has faced structural issues including

operated with local financial institutions headquartereda declining birth rate and an aging population, ain Tochigi Prefecture, thereby demonstrating to ourdwindling population, and a hollowing of the industrial

corporate clients our consulting capabilities tailored tostructure. Such circumstances have made us recognize

their business stage.

that it is a significant challenge that we, as a regional

In individual banking, we enhanced products andfinancial institution, shall contribute to the development

services tailored to the life events of customers andof the regional economy through further facilitation ofbegan offering the “Education Fund Grant Specialized

regional financial activities.

Deposit” and the new card loan product named “Mo •All of our executives and employees will make their

Shi • Ca.” In addition, through a business alliance withbest efforts for the mutual development of regional

Asahi Trust Co., Ltd., we started an inheritance-related

customers as well as the Group, including the Bank.

business that offers such services as trust by will andI would like to thank our stakeholders for their continued

began offering, as an intermediary, individual trusts.

support and encouragement of the Group.

In our branch network, the Takasaki Loan Center,
which had been set up in the Takasaki Branch, was relo-

July 2014cated into a staffed sub-branch-level office specialized inloan services. Moreover, the name of the Mizuhono subbranch-level office (retail center) was changed to the

Significant Management Indicators (Fiscal 2015)
The Bank, non-consolidated basis

Ashikaga Holdings, consolidated basis

Profitability• Gross business profit• Net business income¥78 billion¥30 billion

Growth• Balance of deposits and negotiable• ‌Balance of loans and bills discounted• Balance of assets under custody¥5,200 billion¥4,100 billion¥950 billion

Efficiency• OHR

Profitability• Ordinary profit¥19 billion

Soundness60%• (New) Capital ratio

8.2%

Soundness• Ratio of non-performing loans

At 3% or below

ASHIKAGA HOLDINGS CO., LTD. Annual Report 20143

Area of Operation— The high growth potential the North Kanto area,
the enchanting Tochigi Prefecture, our home market —The Ashikaga Bank mainly operates in the four prefectures comprising the North Kanto area, primarily
Tochigi Prefecture, where its head office is located, as well as Saitama, Gunma, and Ibaraki prefectures.

Geographical advantage, transportation infrastructure
The four prefectures of Tochigi, Gunma, Ibaraki, and Saitama (the four prefectures of North Kanto) are within
100km of Tokyo and are directly connected by the high-speed transportation infrastructure including the
Tohoku/Joetsu bullet trains, the Tohoku, Joban, and Kan-Etsu Expressways, and the Kita-Kanto Expressway.
The population of the four prefectures totals 14 million and exceeds the 13 million population of the Tokyo
metropolitan area. In fiscal 2011, the total production of these four prefectures came to ¥47 trillion, rivaling
the GDP of Norway or Belgium.

Abundant tourism resources
The area’s tourism resources are abundant and include UNESCO World Heritage sites of two Shinto shrinesand one Buddhist temple located in Nikko and the famous hot springs resorts of Kinugawa, Nasu andKusatsu. The area is full of enchantment because of its ability to attract tourists not only from the Tokyo
metropolitan area, but also from all over the world. In addition, Tomioka Silk Mill and Related Sites wereregistered as world cultural heritage sites. It is rare to have several world heritage sites within one’s area of
operation, so there is hope that the tourism industry will bring about an economic ripple effect.

Enchanting Tochigi Prefecture
Tochigi Prefecture is a strategic point or the hub of the North Kanto area for transportation and the distribution of goods. The prefectural capital “Utsunomiya” is about one hour from Tokyo. In the distribution of goods,
Tochigi Prefecture has a close relationship with Tokyo and three other North Kanto prefectures. The region
has built up a good balance of various industries, among which are transportation equipment, such as automobiles and aircraft, and pharmaceutical and medical-related industries that have located factories here thatserve as their nationwide core. There are also many SMEs with highly developed technological capabilities
and Tochigi has the distinctive feature of being known as Monozukuri (manufacturing) Prefecture.
Furthermore, Tochigi is also an agricultural prefecture that plays a role as a base for the supply of food to
the Tokyo metropolitan area and many of its agricultural products are ranked as the nation’s top.

Seeking to demonstrate its financial intermediary function
leveraging its growth potential as a widely operating regional bank
Meanwhile, Saitama and Gunma prefectures are near Ashikaga City, the birthplace of the Bank, where it has
opened many branches from very early on. Saitama Prefecture is a large market that rivals the other threeprefectures combined in economic scale, and with 16 branches already setup within Saitama Prefecture, theBank has a befitting business base for the Prefecture’s large economic scale. As a widely operating regionalbank, it conducts sales activities that leverage features and growth potential of local operating areas. As alocal financial institution, it is working to contribute to the development of local communities.

4

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

Number of branches in our operating area (As of April 30, 2014)

Fukushima: 1
TokyoTochigi: 112
Utsunomiya

Ibaraki: 8

Gunma: 15

Saitama: 16

Tokyo: 1

Economic scale of our operating area

Tochigi National Gunma National
IbarakiNational Saitama National
Prefecture Rank Prefecture Rank Prefecture Rank Prefecture Rank
Prefectural gross product (2011)(¥ trillion)

7.8

16

7.6

17

11.4

11

20.3

Population (2013)

5(thousand)

1,986

18

1,984

19

2,931

11

7,222

5

Prefectural income per capita (2011) (¥ thousand)

2,955

8

2,890

11

3,044

6

2,785

17

Number of businesses (2012)

92,263

19

96,54618

122,835

13

258,199

5

7.4

15

7.4

14

11.0

8

12.1

7

Manufactured goods shipped (2012)(¥ trillion)

Note: The above ranks are the ranks among the 47 prefectures.
Source: ‌Prefectural gross product and prefectural income per capita data is from the Cabinet Office. Population data is from the Ministry of Internal Affairs andCommunications. Number of businesses and manufactured goods shipped data come from the Ministry of Economy, Trade and Industry.

The Bank’s Position in Tochigi Prefecture
Agricultural cooperatives
6.4%

Ashikaga Bank
41.7%

Shinkin banks andcredit associations
10.8%
Other banks in Japan
5.8%

Second-tier regional banks
23.4%

Agricultural cooperatives
15.5%
Shinkin banks andcredit associations
12.7%

Loans andBills Discounted

Ashikaga Bank
37.8%

Deposits(March 2013)(March 2013)

Other banks in Japan
7.4%

Other regional banks
11.5%

Second-tier regional banks
20.1%

Other regional banks
6.1%

ASHIKAGA HOLDINGS CO., LTD. Annual Report 20145

Earnings Highlights
Major business indicators (Ashikaga Bank, non-consolidated)
Gross business profit

Overhead costs and OHR

Gross businessGrossprofitbusiness
Coreprofit
gross businessCore grossprofitbusiness profit(¥ billion)

90.0

80.0

70.0

Personnel(¥ billion)

81.8
80.0

80.0

81.8
76.8

81.0
76.8

81.0
75.4

79.9

78.6

79.9

78.6

60.0

75.4

70.0

90.0
60.0
80.0
50.0

Personnel(¥ billion)

80.0
20.0

60.0
54.1

54.1

2.6
25.7

OHR
(%)

61.32

2.6

(¥ billion)

66.13
80.0
20.0

61.32

49.7

2.2

25.7

49.7

20.2

2.2

(%)

61.23

70
61.23
60

48.9

50
48.9
402.1

20.2

OHR

2.1
20.1

30

70
60

20.1

(%)

66.13
25.7

61.32

60.0
054.1
54.1
FY3/12 2.6 FY3/12 2.6 FY3/13
49.7

60.0
0

27.2

2.2

61.32

FY3/13
49.7

61.23

27.2

2.2

FY3/14
48.9

26.6

2.1

70
20
61.23
60
1026.6(¥ billion)(¥ billion)

40.0
20.0 Non-personnel
Personnel
Non-personnel
Taxes
OHRTaxes
25.7(¥ billion) 25.7(¥ billion)

40.0
20.0
Personnel

OHR

27.2

50
48.9
40 2.1(¥40.0billion)(¥40.0billion) 25.7

60.0
30.0
0

31.3
31.3
31.0
31.0
60.0
29.6
29.6
30.0
27.7
27.7
0
25.7 FY3/13
25.7 FY3/14
FY3/12
FY3/13
FY3/12
FY3/14
22.7
22.7
50.0
FY3/12
FY3/13
FY3/1420.0
FY3/12
FY3/13
FY3/14

20.0
30.0
0

20.0
30.0
27.2
27.226.8
25.7
26.6
25.7
0
26.8
10 26.6
25.5
25.4 25.5
25.4 FY3/13
FY3/12
FY3/12
FY3/1424.6 FY3/13
24.6 FY3/14

0
20.0

0
20.0
FY3/12

40.0
10.0

40.0
10.0

Total capital Total
Newcapital
standardNew standard
Capital ratio Capital ratio

9.70
9.47
9.47
10.0Coreincome
10.0 income
Net businessCoreincome
net business income
Net businessnet business
8.63
8.63
(¥ billion)

40.0
3000

(¥ billion)

60
10

20

(¥70.0billion)(¥ billion)

70
20

20

(¥70.0billion)(¥ billion)

30
(%)

050

35.4 (%) 26.6
26.6
10
32.1
32.1
70
61.23
61.23
0
60
FY3/14
FY3/14

66.13
66.13
80.0
61.32
61.32
30.00
26.8
26.8
FY3/12
FY3/13
FY3/1225.5 25.4 25.5 25.4 FY3/13
24.6
24.6
profitand Net income
60.0
60.0 Ordinary
54.1
54.1
2.6 49.7
20.0
20.0
49.7
2.6
48.9
2.2
2.2
2.1
Ordinary profitOrdinary
Net income
profit
Net income

Net businessincomeCoreincome
net business income
Net business incomeCore
net business

50.0
20.0

40

50
0
FY3/1448.9
40 2.1

35.4
27.2

80.0
30.00

31.0

31.0
29.6
29.6
30.0
30.0
50.0
50.0
27.7
27.7
FY3/12
FY3/13
FY3/14
FY3/12
FY3/13
FY3/1425.7 81.0 25.7
81.8
81.8
81.0
79.9
79.9
22.7
22.7
78.6
Net80.0business
and Core net business80.0 income
78.6 income
76.8
76.8
75.4
75.4
20.0
20.0
40.0
10.0

50

40
40.0 costs
40.0 Overheadbillion year
billion. As a25.7 declined
25.7 ¥0.720.2
20.2 on year
20.1to ¥48.9
20.1
30
result,cost ratio (OHR) declined to 61.23%. 30
Ordinary profit
Ordinary
Netoverhead
incomeprofit
Net income

Gross70.0
business70.0
profit declined ¥1.1 billion year on year to ¥79.9 billion
due
to a ¥4.2
billiondecrease
inbusinessgainsincome
on bonds including government
Net businessincomeNet businessCore
incomenet businessCoreincomenet(¥ billion)(¥ billion)
bonds.
However,interest income increased ¥1 billion to ¥63.8 billion
40.0
40.0
60.0
60.0
Gross
business
profit businessCorebusiness
profit to ¥14.3 billion, causing core
Grossfees
business
profitCore grossprofitandandcommission
rosegross¥2.2
billion(¥ billion)
billion)gross(¥90.0
business
profittoincrease¥3.1
billionto ¥78.6 billion.
90.0
31.3

66.13

25.7

81.8
81.8
81.0
81.0
79.9
79.9
78.6
78.6
80.0
50.0 76.8
76.8
75.4 FY3/14
75.4 FY3/13
FY3/12
FY3/12
FY3/13
FY3/14

31.3

66.13
80.0

Non-personnel
Personnel
Non-personnel
Taxes
OHRTaxes(¥ billion)

90.0
60.0

(¥ billion)

40.0

40.0

Gross businessGrossprofitbusinessCore profit
gross businessCore grossprofitbusiness profit(¥ billion)

Non-personnel
Personnel
Non-personnel
Taxes
OHR
Taxes

(¥ billion)

90.0

25.7

40.0
10.0

FY3/12

20.2

20.1
20.1
30
35.4
35.4
32.1
32.1
20

20.2

FY3/13

FY3/13

FY3/14

(%)
10
70

0
60
50
40
30
20
10

0
FY3/14

0

(%)

(%)

Total capital Total
Newcapital
standardNew standard
Capital ratio Capital ratio

9.70
8.49

7.63
7.63
40.0
3000
FY3/12
FY3/12

(%)

10
8.49

(%)

(¥ billion)(¥ billion)

10Ordinary
10.0
10.0
profit
Net income
profitOrdinaryNet
income(¥ billion)

40.0
3000

8

8

4

4 Individual(¥ billion)

40.0
7.47
3000
FY3/12

8.07
7.47

8.32
8.07

8.32
8.36

8.68
8.36

10
8.68

10

8
8
35.4
35.4
FY3/13
FY3/14
FY3/13 31.3
FY3/14
FY3/12
FY3/13
FY3/13
FY3/14
FY3/14
32.1
32.1
252.9
252.9
31.3
242.9
242.9
236.2
236.2 31.0 29.6
234.731.0 629.6
234.7
6
6
6
219.9
219.9
30.0
30.0
30.0
30.0
27.7
27.7
209.3
209.3
209.8
209.8
26.8
26.8
198.2
198.2
Although
there
were
lower
gains
on
bonds
includinggovernment
Ordinary
profitincreased¥8.5
billion
year
on
year
to
¥35.4
billion
25.7
25.7
25.5
25.4
25.5
25.4
200
200
200
200
185.0
185.0
182.8
182.8
24.6
24.6
22.7
22.7
bonds,
overhead
costs
Therefore,
net business income
mainlyfromNew
posting¥12.3
billionTotal capital
Total
Newcapital
standard
Newdecreased.
Capitalstandard
ratio Capitalratio
Newcapital
standard
Capitalstandard
ratio
Capitalratio in gains on sale of stocks. Net income
44 Total capital Total
4
4(¥20.0billion) ¥0.3(¥20.0billion)(%)(%) (¥20.0
billion)(¥20.0billion)¥7.5 billion year on year to ¥32.1 billion.
(%)(%)
decreasedbillion year on year to ¥31.0 billion.
Core
increased
9.70
9.70net business
9.47
9.47
10
10
10
10
incomeafter
deducting
the
gains
or
losseson
bonds
includinggovern100
100
100
100
8.68
8.63
8.63
8.49
8.49
2
2 8.68
2
8.32
8.32
8.36
8.36
ment bonds 7.63
increased7.63¥3.8 billion year on year to ¥29.6 billion. 2
8.07
8.07
7.47
7.47
10.0
10.0
8
8
8
8
10.0
10.0
300
300
300
300
0
0
0
0
0
0
0
0
252.9
252.9
Mar. 31,
Mar.
Mar.
Mar.
Mar.
Mar. 31,
Mar.
Mar.
Mar.
Mar.
Mar.
31,31,
Mar.
31,31,
Mar.
31,31,
Mar.
31,31, Mar. 31,
Mar.
31,31,
Mar.
31,31,
Mar.
31,31,
Mar.
31,31, Mar.
31,
242.9
242.9
236.2
236.2
234.7
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
2010
2011
2012
2013
Capital ratio
66234.7
6
62014
219.9
219.9
209.3
209.3
209.8
209.8
0
0
0
0
198.2
198.2
FY3/12
FY3/13
FY3/14
FY3/12
FY3/13
FY3/14
200
200
200
200
185.0
182.8
FY3/12 185.0
FY3/13
FY3/14
FY3/12 182.8
FY3/13
FY3/14

Ashikaga
Holdings(consolidated)
Individual
Corporate
Individual
PublicCorporate
sector+Public
financialsectorinstitutions+ financial institutions(¥ billion)

100
Total4,000
capital(¥ billion)

4,000
100
Total
capitalstandard
New
standard New Capitalratio
3,641.0
3,641.0(¥ billion)

4,007.3

4,007.3

3,775.2ratio 3,775.2
Capital504.9 2 504.9(%)
9.70498.7 9.70
438.6
438.6 9.47 498.7 9.47
10
8.63
8.63
8.49
3,00003,00000 8.49
Mar.
31,
Mar.
31,
Mar.
31,
Mar.
31,
Mar.
31,
Mar.
31,
Mar.
31,
Mar.
31,
Mar.
31,
Mar.
31,
7.63
7.63
1,957.3 82014
1,957.3
2010
2011
2012
2013
2014
2010
2011
2012
2013
1,857.0
1,857.0300
300
1,854.5
1,854.5
252.9
252.9
2,000
2,000
236.2
236.2
234.7
6 234.7
Individual
Corporate
Individual Public
Corporate
sector +Publicfinancialsectorinstitutions+ financial institutions
209.8
209.8
(¥ billion)(¥ billion)
200
185.0
200
185.0
4,007.3
4,007.3
4,000
4,000
3,775.2
3,775.2
1,000
1,000
3,641.0
3,641.0504.9 4 504.9
1,544.9
1,544.9
498.7
498.7
1,419.5
1,419.5
1,347.7
1,347.7
438.6
438.6
100
100
2
3,000
3,000
0
0
Mar. 31,Mar. 31,Mar. 31,Mar. 31, Mar. 31,1,957.3
Mar. 31,1,957.3
2012 1,854.5
2013 1,857.02013 1,857.0
2014
2012 1,854.5
2014
0
0
0
Mar.
31,31,
Mar.
31,31,
Mar.
Mar.
31,31,
Mar. 31,
Mar.
31,
Mar.
Mar.
Mar.31,31,
Mar.
2,000
2,000
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
(¥ billion)

Ashikaga
Bank
Corporate
Individual Public
Corporate
sector +(non-consolidated)
Publicfinancialsectorinstitutions+ financial institutions
Negotiable certificates
Negotiableof deposit
certificatesof deposit44(¥ billion)

6,000
100
100 Total
capitalstandard
Total6,000
capitalNew
standard New Capitalratio(%) (¥ billion)(¥ billion)

2

Capital ratio

225,183.9
5,183.9(%)(%)
4,963.0
4,963.0226.0
4,856.1
4,856.1
226.0
10 5,000
10
10
5,000
180.9
180.9
169.9
396.3
169.9
396.3
8.68
8.68
388.0
388.0
386.5 8.32
386.5
0
0
0
0
0
8.32
8.36
8.36
8.07
8.07
Mar. 31,
Mar.
Mar.
Mar.
Mar.
Mar.
31,31,
Mar.
31,31,
Mar.
31,31,
Mar.
31,31, Mar. 31,
4,000
1,112.3 8 2014
1,112.3 8
7.47
7.47
1,057.1 2013
8 4,0002010
2011 1,035.6
2012 1,057.12012
2013
2014
2010
2011
1,035.6
300
300
3,000
3,000
242.9
242.9
6Individual Corporate
6
6
219.9 of deposit
Individual Public
Corporate
sector +Publicfinancialsectorinstitutions+ financial 209.3
institutions
Negotiable
Negotiablecertificatesof deposit
219.9 certificates
209.3
198.2
198.2
(¥2,000
billion)(¥billion)
200
182.8
200
182.8
2,000
3,449.2
3,449.2
3,337.0
3,337.0
6,000
6,000
3,264.0
3,264.04
4
45,183.9
5,183.9
1,000
1,000
4,963.0
4,963.0
4,856.1
4,856.1
226.0
226.0
5,000
5,000
180.9
180.9
100
169.9100 169.9
396.3
396.3
388.0
388.0
2
2
2
386.5
386.5
0
0
Mar. 31,Mar. 31,1,057.1
Mar. 31,1,112.3
Mar. 31,Mar. 31,1,057.1
Mar. 31,1,112.3
4,000
4,000
1,035.6
1,035.6
2012
2013
2014
2012
2013
2014
0
0
0
0
0
Mar.
31,31,
Mar.
31,31,
Mar.
Mar.
31,31,
Mar. 31,
Mar.
31,
Mar.
Mar.
Mar.31,31,
Mar.
3,000
3,000
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
Investment trusts
Investment
Life insurance
trusts
LifeBonds
insurance

6

Mar. 31,438.6Mar. 31,438.6
Mar. 31,498.7Mar. 31,498.7
Mar. 31, Mar. 31,
1,298.5 2014
1,298.5 2014
2012
2013
2012
2013
1,300
3,000

1,957.3
1,957.3
1,218.3
1,218.3
1,857.0
1,188.2 1,854.5
1,188.2 1,857.0
1,854.5
1,178.0
1,178.0
1,200(¥2,000
billion)ASHIKAGAHOLDINGS
CO., LTD. Annual Report 2014
1,500
1,500
1,100
1,100
1,425.1
1,425.1
1,000
1,000
1,400
1,400
1,544.9
1,544.9
1,200(¥2,000
billion)4,963.0
4,963.0Mar.
31,230.0Mar.
31,
31,230.0Mar.
Mar.
31,226.0Mar. 31,226.0
Mar. 31,4,856.1
4,856.1
5,000
2013 388.02014 396.32014 396.3
169.9 2012 169.9 2012 180.9 2013 180.9
388.0
386.5
386.5
272.8
272.8
262.2
262.2
4,000
1,112.3
4,000
400
400
1,112.3
1,057.1
1,057.1
1,035.6
1,035.6
218.2
218.2
Investment trusts
Investment
Life insurance
trusts
LifeBonds
insurance
Bonds
5,000

(¥ billion)
3,000
800
200
2,000

600

(¥
billion)
3,000

Local government
Localand
go

Bonds

Since
March (¥31,
2014, the capital ratio is calculated using a new domestic standard
2,000
2,000
(¥ billion)
billion)(¥ billion) based(¥
billion)on Basel III.
3,449.2
3,449.2
3,337.0
3,337.0
3,264.0
3,264.0
800 Corporate
800
1,500
1,500 Holdings
1,000 Public
1,000
756.8
756.8
Individual
Corporate
sector+ financial
Individual
Corporate
sector+ financial
institutions
NegotiablecertificatesdepositIndividual
Corporate
sector +Publicfinancial
institutions
Individual
Publicsector +Publicfinancial
institutions
Negotiablecertificatesof deposit
747.0
747.0
Ashikagaconsolidated
capitalratioinstitutions(new domestic standard) was
8.49%
due
to theimplementationof capital
policies
including
aofpublic
1,544.9
1,544.9
1,419.5
1,419.5
1,000
1,000(¥ billion) 1,347.7(¥ billion)
689.9
689.9
(¥ billion)
billion)
1,425.1
1,425.1
1,347.7 (¥24.9 billion in 4,007.3
offering
associatedwith the listing
total)
and4,007.3
redemptionof(¥6,000
preferredstock(acquiredamount: ¥79.2 billion). Ashikaga Bank’s capital
4,000
6,000
4,000
180.6
180.6
3,775.2
3,775.2
213.0
213.0
1,400
3,641.0
3,641.0504.9
504.9was 8.68%.
ratio1,400
on0a non-consolidated
basis (new domestic standard)
6000
6000
5,183.9
5,183.9
0
1,300
3,000

Local government
Localandgo(¥ billion)

800
756.8
756.8
747.0
747.0
200
689.9
689.9
281.5
293.5
281.5
293.5
2,000
3,449.2
241.7
241.7
3,449.2
3,337.0
3,337.0
3,264.0
3,264.0
180.6
180.6
213.0
213.0
600

Localandgo
Local government

8.63

8.63
0
300

7.63
7.63 0FY3/12
FY3/12
300

236.2
209.8
Total capital Total
Newcapital
standardNew209.8
standard
Capital ratio Capital ratio
200
185.0
200
185.0
(¥ billion)(¥ billion)
9.47
8.63
8.63
100
100
7.63
7.63
300
0
200

8.49

8.49

FY3/13

FY3/13

FY3/14

252.9
236.2

252.9
234.7

9.70
9.47

9.70

6234.7300
0Mar. 31,
200
185.0
2010

236.2
209.8
Mar.
31,31,
Mar.
2011
2012

209.8
Mar.
31,31,
Mar.
185.0
2010
2011

252.9
234.7
Mar.
31,31,
Mar.
2013
2014

252.9
236.2
Mar.
31,31,
Mar.
2012
2013

Balance of loans and bills discounted

Individual Public
Corporate
sector+ financial institutions
Corporate
sector +Publicfinancial
institutions
100
100(¥ billion)(¥ billion)
4,007.3

(%)

410
8.49

410

28

28

06234.7
Mar. 31,
2014

06

4

4

0

4,000
3,641.03,000

0Mar. 31,
3,000
2010

Individual

Corporate
Individual

2,000

2,000

(¥ billion)

1,000

1,000

3,000

3,000

0
2,000

1,854.5

2
4,007.3

3,775.2

1,857.0(¥ billion)

1,200
1,500

4,000
Individual

3,000

4,000
0

(¥ billion)

1,178.0
1,200
1,500

1,188.2
1,178.0

1,218.3
1,188.2

1,000
1,300
1,200

Mar.
31,31,
Mar.
2010
2011
1,188.2
1,178.0Mar.
31,31,
Mar.
2011
2012
1,218.3
1,188.2

3.71
200

1,000
800

600

3.39
3.32
33.6
26.0

Assets undercustody200
185.0

1,425.1(¥ billion)

200

689.9
200

600

600

14

3.32
3.20
33.6
31.7

0

Total capital

400

218.2

218.2
100

800

756.8

756.8

747.0

689.9

200

200

200
4

747.0

4,000

3,000
0
Mar. 31,Mar. 31,
2012
2012

0

Mar. 31,Mar. 31,2013
2013
1,854.5

00Individual

293.5

Mar. 31, Mar. 31,
2014
1,857.0 2014

6,000

504.9

5,000
4,000

1,957.3

2,000 in investment trusts and life insurance, assets under
Despite increases
custody decreased ¥9.8 billion to ¥747.0 billion owing to a decrease inbonds.
1,000

3,000
2,000

1,544.9

3.20
1,419.5
1,347.7
31.7
34.7
34.7
2.81
03
032.81
Mar.
31,
Mar.
31,
Mar.
31,
Mar.
31,
Mar.
31,
0
122.5
122.5
122.3
119.0
119.0
114.4
114.4
2011
2014
2010 19.0 201020112012 11.1 2012
2013
2014
Mar. 31,Mar. 31,Mar. 31,
9.5 2013
9.5
11.1
19.0
17.5
17.5
8.1
8.1
2012 year on year.
2013
2014
Risk-monitoredloans in fiscal 2013 based on the Banking Act
cameto¥114.3billion, a decrease of ¥8.0 billion
Among risk-monitored
100
100
2
2
26.1

0
0
150
150
Risk-monitored
loans
Mar.
31,31,
Mar.
31,31,
Mar.
31,
Mar.
Mar.
126.4
126.4
122.3

1,000
0

loans, loans of self-assessedbankrupt debtors
arerecordedas “loans 71.5
to bankrupt borrowers,” loans of effectively bankrupt debtors and potentially
81.3
81.3
77.5
77.5
71.5
81.2
81.2
75.4
75.4
bankrupt
debtors requiring caution, those loans that are three or more months
50 debtors
50 are recorded as “non-accrual delinquent loans,1” and among1(¥ billion)delinquent are recorded as “loans past due 3 months or more” and those that are being restructured
are recorded as “restructured loans.”
0(¥ billion)

33.6
26.0

26.1
26.1
26.0
0
Mar.
31,31,
Mar.
31,31,
Mar. 31,
Mar.
Mar.
2010
2011
2010
2011
2012

33.6
31.7

Mar.
31,31,
Mar.
2012
2013

31.7
34.7

34.7

0
2010
Mar.
31,Mar.
Mar.
31,
Mar.
31, 31,
2013
2014
2014

Loans to bankrupt borrowers
Non-accrual delinquent loans
Risk-monitored
Loans past due 3 months or moreloans
Restructured loans
Total risk-monitored loans
Amount of partial write-off executed
Balance of loans and bills discounted (term-end)
Ratio of risk-monitored loans (%)

10.2
89.5
0
26.0
125.9
20.7
3,365.9
3.74

1,500

0

Mar. 31, 2011

4.3
88.3
0
26.0
118.7
23.4
3,473.2
3.41

Disclosed claims under the Financial Revitalization Law
As of March 31, 2014, disclosed claims under the Act on Emergency Measures for the
Revitalization of the Financial Functions (hereinafter, “Financial Revitalization Law”)
came to ¥114.4 billion, down ¥8.1 billion year on year.
Disclosed claims under the Financial Revitalization Law are “bankrupt andsubstantially bankrupt claims” of self-assessed bankrupt debtors and effectively
bankrupt debtors, “doubtful claims” of potentially bankrupt debtors, and among
debtors requiring supervision, those that fall under the category of loans past due 3months or more or restructured loans are disclosed as “claims requiring supervision.”Mar. 31, 2012

Mar. 31, 2014

3.2
87.3
0
1,188.2
31.7
122.4
12.4
3,775.2
3.24
Mar.
31,

3.0
76.51,298.5
01,218.3
34.7
114.3
9.5
4,007.3
Mar. 31, 2.85Mar. 31,

1,400

3.6
84.8
1,300
0
1,20033.61,178.0
122.1
1,10017.2
3,641.0
1,000
3.35Mar. 31,
2010

Claims requiring supervision
Ratio of disclosed claims(¥ billion)

200
150
100
50
0

2011

Doubtful claims

2012

Investment tru(¥ billion)

800

Comparedwith
1,425.1
Mar. 31, 2013

Mar. 31, 2013

2013

(0.2)
(10.8)
0
2.9
(8.0)
(2.9)
232.0
(0.39)
Mar.
31,

600

400

200

0

2014

Bankrupt and substantially bankrupt claims
(%)

3.71

3.39

3.32

119.0

122.3

4

3.20
2.81

126.4
19.0
81.2
26.1
Mar. 31,
2010

17.5
75.4
26.0

Mar. 31,
2011

11.1

122.5

9.5

114.4

3
8.1

77.5

81.3

71.5

33.6

31.7

34.7

2
1

Mar. 31,2012

Mar. 31,2013

C(¥ billion)

4,007.3

3,775.2
281.5
293.5
498.7

3,641.0
281.5
241.7
438.6

100

2

241.7
0
230.0

241.7

4

300

6

272.8

272.8

262.2

Bonds262.2(¥ billion)

71.5(%)
14(¥ billion)

8

180.6
180.6
213.0
213.0
281.5
293.5
281.5
293.5
241.7
230.0
Mar. 31,Mar. 31,Mar. 31,Mar. 31,Mar. 31,
2010
2011
2012
2013
2014
0
Mar. 31,Mar. 31,262.2
Mar. 31,272.8
Mar. 31,Mar. 31,262.2
Mar. 31,272.8
400
2012
2013
2014
2012
2013
2014
218.2 Public sector + financial institutions
218.2 Corporate
Individual

0Mar. 31,2014

400(¥ billion)800

disclosed
claimsRatioof actively
disclosed claims
dueRatio
toofefforts
tomeet both the borrowing needs 81.3
for new
77.5
81.3
77.5
71.5 (%)
81.2
81.2the need(¥ billion)(¥ andbillion)75.4
75.4
housingloans3.71
for refinancing.
3.71
50

10.0

747.0
689.9 300 689.9
0Mar. 31,Mar. 31,213.0Mar. 31,213.0
Mar. 31,180.6
Mar. 31,Mar.
31,180.6
252.9
236.2
234.7
600
2012 230.0 2012 230.0 2013
2014
2013
2014
209.8

400

4

20.0

Local government
Localandgo

Corporate
Public sector +Publicfinancialsectorinstitutions+ financial institutions
Negotiable certificates
Negotiableof deposit
certificates of deposit

Investment trusts
Investment
Life insurance
trustsLife Bonds
insurance

1,298.5
Mar.
31,31,
Mar.
2013
2014

30.0

1,000

1,298.5

3.71
3.39

3.39
26.1
26.0

Ordinary profit(¥ billion)
Localandgo
Local government

40.0

756.8
747.0
7.63 756.8respectively.
billion800
in corporate deposits

0

3.39
3.32
3.32
3.20
3.20
1,000
2.81
2.81
Mar.
31,31,
Mar.
31,31,
Mar.
31,31,
Mar.
31,31, Mar.
Mar.
Mar.150
31,
Mar.
Mar.
Mar.
3
3 31,
126.4
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
126.4
122.5
122.3
122.5
122.3
119.0
119.0
114.4
114.4
9.5
11.1
9.5
19.0
11.1
19.0
17.5
17.5
8.1
8.1 billion
Thebalanceof100
housingloans climbed¥126.6billionto ¥1,425.1
2 claims 2
Claims100
requiring
Claimssupervision
requiring supervision
Doubtful claims
Doubtful
Bankrupt
claimsand Bankrupt
substantially
andbankrupt
substantiallyclaimsbankrupt
200

0

FY3/14242.9
06
06
Mar. 31,2014

FY3/13
242.9
219.9
219.9
209.3
Mar.
31,31,
Mar.
31,31,
Mar.
Mar.
2012
2013
2013
2014

Total capital
New standard
Capital ratio
The balanceof deposits
and negotiablecertificates of deposit rose

1,000
150

50
200

209.3
Mar.
31,31,
Mar.
198.2
2011
2012

20.0

28

28
FY3/12410(¥ billion)
(%)
2,000
2,000
9.70 3,449.2
3,449.2
3,337.0
9.47billion
billion
toLife¥5,183.9
on a ¥112.2
increaseto ¥3,449.210
Investment
trusts3,264.0
insurance
Bonds3,337.0
Investment ¥220.8
trustsLife
insurance
Bonds
3,264.0billion
8.63a ¥55.1 billion increase to ¥1,112.3(¥ billion)(¥ billion)
8.49
billionin individual deposits andClaimsrequiring supervision
Doubtful
claimsand substantially
Bankrupt andbankrupt
substantiallybankrupt claims
Claims requiringsupervision
Doubtful claims
Bankrupt
claimsRatioclaimsof disclosed claims
Ratio of disclosed(¥ billion)(%)(¥
billion)
(%)
1,100
1,100

200

(%)

6,000
10.0
2,000
5,183.93,449.2
5,183.93,449.2
3,337.0
3,264.0
3,264.0
4,963.0226.0
4,963.03,337.0
4,856.1
4,856.1
226.0
5,000
180.9
180.9
169.9
396.3
169.9
396.3
1,000
388.0
388.0
386.5
386.5
0
FY3/12
FY3/13 1,112.3
FY3/144,000
1,112.3
1,057.1
1,057.1
1,035.6
1,035.60Mar. 31,Mar. 31, Mar. 31, Mar. 31,
Mar. 31,Mar. 31,
3,000
2012
2013
2014
2012
2013
2014

3,000

1,218.3

1,298.5
Mar.
31,31,
Mar.
2012
2013
1,218.3

(%)

410
8.68

(¥ billion)

5,000
1,000

1,100
1,400
1,000
1,300
Mar. 31,2010
1,178.0
1,200

3,000

6,000
2,000

1,425.1
1,425.1
Mar. 31, Mar. 31,
2014
2014

1,298.5

1,300

Mar.
31,31,
Mar.
198.2
182.8
2010
2011

Corporate
Individual

1,957.3
1,957.3
01,857.0
1,857.0
Mar. 31,1,854.5
Mar. 31, Mar. 31, Mar. 31,
Mar. 31,1,854.5
Mar. 31,
2,000
2012
2013
2014
2012
2013
2014

Mar. 31,2013

0Mar. 31,
200
182.8
2010

40.0

31.3
31.0
29.6
5,183.9
5,183.9
30.04,856.1 27.74,963.0
4,963.0226.00004,856.1
226.0
5,000
180.9
25.7
180.9
Mar.
31,31,
Mar.
31,31,
Mar.
31,31,
Mar.
31,
31,
Mar. 31, 169.9
Mar.
Mar.
Mar.
Mar.
31, Mar.
396.3
169.9
396.3
388.0 2013
2010
2011
2014
2010
2011 386.5
2012
2013
2014
386.5
22.7 388.0 2012
4,000
1,112.3
1,112.3
1,057.1
1,057.1
1,035.6
1,035.6
20.0

5,0000(¥ billion)

Mar. 31,
2013

100
7.47
300

8.07
7.47
50.0

6

6,000

4,007.3
4,007.3
3,775.2
3,775.2
3,641.0
504.9
504.9
498.7
498.7
438.6
438.6
1,544.9
1,544.9
1,419.5
1,419.5
1,347.7
1,347.7

Mar. 31,
2012

8.68
8.36

242.9
6

Balanceof deposits
andnegotiablecertificatesof deposit
Net businessincomeCorenet businessincome
4
4

6,000

4,000
3,641.00Mar. 31,
1,400
2012

8.32
8.36

8.32
8.07

60.0

(¥ billion)
Individual Public
Corporate
sector+ financial institutions
Negotiablecertificates of deposit
Corporate
sector +Publicfinancial
institutions
Negotiable certificatesof deposit
40.0
100
100
(¥ billion)(¥ billion)
22

1,957.3

1,425.1
1,100
1,400

0

Corporate
Public sector +Publicfinancialsectorinstitutions+ financial institutions

Balance of housing loans
1,300

300

0

The balance of loans and bills discounted rose ¥232.0 billion year on
year to ¥4,007.3 billion due to a ¥125.5 billion increase to ¥1,544.9
1,000
1,000
(¥ billion)(¥ billion)
billionin lending
to individual customers,
primarily
for housing
1,544.9
1,544.9 loans,
1,419.5
1,419.5
1,347.7
1,347.7
and 1,500
a ¥100.3 1,500
billion increase to ¥1,957.3 billion in corporate loans.
0
1,400

242.9
219.9

60.0
100

2

504.9
0
Mar. 31,2014

1,957.3

1,857.0

182.8(¥ billion)

219.9
209.3

78.6
8

FY3/148

Individual

3,641.0
504.9
498.7
498.7
438.6
438.6
Mar.
Mar.
Mar.
Mar.
Mar.
31,31,
Mar.
31,31,
Mar.
31,31,
Mar.
31,31,
2011
2012
2013
2014
2010
2011
2012
2013
1,854.5(¥ billion)

4,000

3,775.2

200
182.8

200

(¥ billion)

200

Individual

4,000

209.3ratio
Total capital Total
Newcapital
standardNew198.2
standard
Capital ratio 198.2
Capital

8.68
79.9

8.68
8.36

FY3/1475.4

FY3/13

70.0

6

(%)

8.49

300

81.0
8.32
8.36

8.32
8.07
76.8
FY3/1380.08.07
0
7.47FY3/12 7.47FY3/12
300

0

8

FY3/14
8

Mar. 31,2014

0

ASHIKAGA HOLDINGS CO., LTD. Annual Report 20147

Efforts to Promote Relationship Banking
Under the watchwords of Retail & Relationship, Ashigin (the name by which the Bank is commonly known
in Japan) seeks to raise corporate value by fulfilling its function as a regional financial institution andgrowing together with its customers.

Initiatives to provide business support to SMEs
Business startup and development support
The Bank signed an “MOU Regarding Business Startup andDevelopment Support” with the Society of Commerceand Industry and the Chamber of Commerce & Industry

Prefecture food exhibition and business confab 2014) with182 companies participating in the exhibition. The event
was intended to support business matching in food andagricultural fields.

in Tochigi. We provide business and financial support
including the formulation of business plans for clients thatwant to form, startup and restart a company locally.
• ‌Made loans for 70 customers (total value: ¥396 million) for
the support of theirnew business startups and development.

Support during growth phase
Reinforce initiatives in growth fields

Manufacturer’s Exhibition/Business Confab 2013

As new loan products that support clients who are actively
working in growth fields, we offer the Ashigin Growth
Platform Support Fund and the Ashigin Support Fund forEnvironmental Initiatives.
As a loan product for clients engaged in the solar power
generation business, we began offering the Ashigin Solar
Power Generation Support Loan in March 2013.

Held business matching events and business confabs

Food Selection 2013 Business Confab

In May and June 2013 and February and March 2014, we
held small-scale business confabs with Nex-area Company

Strengthening the overseas business support system

Limited, a company managing expressway service areas

Based on the high level of interest in customer entry into(SA) and parking areas (PA), SA and PA restaurants and foodoverseas markets against a backdrop of expanding overseas

management companies, and food-related companies,

markets, we are strengthening our overseas businesswith a total of 23 companies participating in the events.

support system for those customers.

In October 2013, 38 local banks including the Ashikaga
Bank jointly held the Food Selection 2013 Business Confab,

to provide information to customers seeking to expand

which is a food exhibition and business confab, with 28 of

their business in Asia. In September 2013, 41 groups

our corporate customers participating in the exhibition.

co-hosted Nicchu Monozukuri Shodankai@Shanghai 2013

In November 2013, the Bank, six shinkin banks and two(Japan-China Manufacturers’ business confab@Shanghai

credit associations in Tochigi Prefecture jointly held the2013) sponsored by Factory Network China. This event was

Monozukuri Kigyo Tenji/Shodankai 2013 (manufacturers’

intended to help customers in the manufacturing industry

exhibition/business confab) with 193 companies participat-

to procure parts and expand sales channels in China.

ing in the exhibition. The event was intended to support• ‌Held the “Sales Channel Expansion Support for the Small

expanding sales channel of local manufacturers.
In January 2014, the Bank and Tochigi Prefecture jointly
held the Tochigi Shoku no Tenji/Shodankai 2014 (Tochigi

8

In fiscal 2013, the Bank held numerous seminars in order

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

and Medium-sized Parts Industry Seminar” in May 2013• ‌Held the “Sales Channel Expansion Support for Asia
Seminar (for halal business)” in July 2013

Company Trends Seminar” in January 2014

Support for management improvement,
business rehabilitation, and change of business• ‌Held the “China Seminar (Chinese Economic Issues and• ‌Number of management improvement plans formulated:

Prospects)” in March 2014150

• ‌Held the “Mexican Automobile Industry and Japanese• ‌Number of customers assisted through the Small andMedium-sized Enterprise Revitalization Support Councils: 89• ‌Number of cases in which the Bank offered consultancy
services on business succession matters such as transfer ofown stock to a successor: 258• ‌Number of cases in which M&A consultation services were
offered: 95 (of these, seven were intermediary services andfive contracts were signed)
Japan-China Manufacturers’ business confab@Shanghai 2013

Proactive initiatives in local revitalization
Regional Economic Revitalization Study GroupThe Regional Economic Revitalization Study Group, which
was established jointly by Tochigi Prefecture, the Nomura
Group and the Ashikaga Bank, discussed measures containing the themes of Food and Agriculture, Inviting
Companies, Tourism, Renewable Energy, Overseas Business
Development (expanding sales distribution and businesses).

[Tourism]
Again this year, Tochigi Tourism Promotion Leader Training
Seminar Management Council, which was establishedjointly by Tochigi Prefecture, the Ashikaga Bank and financial institutions in Tochigi Prefecture, held the Tochigi
Tourism Promotion Leader Training Seminar that was
attended by 45 people.
In addition, we held the “Major Prefectural Tourist Sites[Food and Agriculture]

Information Exchange” 12 times by March 2014. TheseAt the Food and Agriculture Company Support Project, aexchange briefings have given rise to new collaboration

collaboration between government, industry, academia,

between the tourist sites and we will continue to work on

and finance involving Tochigi Prefecture, Nomura Securities,

tourism promotion through collaboration with tourism-

Utsunomiya University, and the Ashikaga Bank, we held arelated groups.

research results briefing for six selected supporting companies in March 2014.

Fiscal 2013 Topics
2013 July• ‌To strengthen asset-based lending (ABL) initiatives, we concluded outsourcing agreements with two outside
specialist companies.

August	‌• ‌Established the Tochigi Network Fund Investment Limited Partnership, an SME revitalization fund, jointly with
the Organization for Small & Medium Enterprises and Regional Innovation,
JAPAN, Credit Guarantee Corporation of Tochigi Prefecture, and others.
September	‌• ‌Set up the Tochimaru Sixth Industrialization Growth Support Fund jointlywith the Agriculture, forestry and fisheries Fund corporation for Innovation,
Value-chain and Expansion Japan, and others.
December • ‌Ashikaga Holdings listed on first section of Tokyo Stock Exchange		‌• ‌Strengthened support to customers who are expanding business in Vietnam and formed a business alliancewith Joint Stock Commercial Bank for Foreign Trade of Vietnam (generally referred to as Vietcombank), a majorcommercial bank in Vietnam.
2014 January	‌• Formed‌a business alliance with State Bank of India (of India) and Metropolitan Bank & Trust Company (of thePhilippines) to strengthen support to customers expanding business in Asia.
February	‌• ‌Began offering inheritance-related services and individual trusts based on a business alliance with Asahi Trust Co., Ltd.
ASHIKAGA HOLDINGS CO., LTD. Annual Report 20149

Corporate Social Responsibility Activities
Efforts for solving environmental issues
Tree Planting in the Ashio MountainProtection of Nikko Cedar Avenue

The Bank addressed an environmental problem, mainly that

The Bank supports the Nikko Cedar Avenue Ownershipof the water circulation system, through its tree planting

System operated by Tochigi Prefecture to protect thisactivities in the Ashio Mountains, which had been devas-

world-famous arboreal asset at the Nikko cluster of temples

tated by smoke pollution. Considering the problems in theand halls. The Bank became a tree-owner in 1996. Since

headwaters area of the Watarasegawa River, we support

then we have continuously stepped up purchases, andthe activities of the NPO Grow Green in Ashio and engage

now own 78 cedar trees, the most cedar trees owned byin tree-planting activities there every year. The purpose

one group, at a cost of ¥10 million per tree. In addition,of the NPO is to contribute to making healthy natural

the Bank is working on beautification activities, including

environment and prosperous local communities. In June

participation in the cleanup at the Avenue.

2014, 86 new employees of the Ashikaga Bank and 78 new
employees of member companies of the Tochigi Prefecture

Developing Ashigin’s Forest

Industrial Cooperation Council planted about 330 young

The Bank developed Ashigin’s Forest in the Tochigi

trees in the Ashio Mountains.

Prefecture Prefectural Citizen’s forest in Yaita City. Since April
2012, we have twice participated in the planting of trees,with about 550 people including the Bank’s executives,
employees and their families. Based on Tochigi Prefecture’s
carbon offset system, we certified that these tree-planting
activities reduced CO2 emissions by 1.84 tons in fiscal 2012
and 1.04 tons in fiscal 2013. In fiscal 2014, in order to createa more growth-friendly environment for young trees, wewill remove the underbrush that obstructs growth anddevelop walkways.

New employees participating in tree-planting activities

Certification based on the
Tochigi Carbon Offset System

Contributing to health and welfare
Building environment- and people-friendly
branches
We installed solar power generation systems in the Ashigin
Building (Utsunomiya Nishi Branch) and the Interpark
Retail Center (Interpark Branch) and used LED light bulbs
to light the branch interior and used wood produced in
Tochigi Prefecture in the tables in the reception area andseminar rooms. Further, ATMs that can be easily used byvision-impaired and wheelchair-bound customers have

10

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

Seminar room made from
Tochigi Prefecture lumber

been installed. We will continue to build
branches based on the concept of being“environment- and people-friendly.”

Solar power generation information panel set up in
branch office

Wheelchair accessible ATMs

Promoting financial education
Held “Economics Koshien” Tochigi Tournament
In December 2013, in order to expose high school students

Public Interest Incorporated Foundation,
The Ashigin International Foundation

to finance and economics and provide them an opportu-

We established the Ashigin International Foundation innity to gain financial knowledge in an enjoyable way, we1985 aiming to promote international exchange activities

held the 8th All Japan High School Quiz of Finance andand contribute to the creation of an international regional

Economics Championship “Economics Koshien” Tochigi

society. The Foundation provides subsidies and other aids

Tournament.

to international exchange groups in the region and foreign
students from abroad studying in the region.

“Economics Koshien” Tochigi Tournament

Culture and sports promotion
In fiscal 2011, we became a naming rights partner of music

So that we can cheer for local professional sport clubs

concerts, Ashigin Maronie Kencho Concert, hosted bywith local people, we are the official partner of Tochigi SC

Tochigi Prefecture, and have been providing support for(Tochigi Soccer Club Co., Ltd.) as well as the official sponsors

organizing presentations of cultural activities and events byof the Utsunomiya Blitzen (Cycle Sports Management Co.,

residents in the prefecture.

Ltd.) and H.C. Nikko Ice Bucks (Tochigi United Co., Ltd.)Utsunomiya Blitzen Bicycle Classroom

Official game of H.C. Nikko Ice Bucks

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201411

Corporate GovernanceTo strengthen and enhance corporate governance, the Group seeks to establish a responsible management system and ensure management transparency.
Ashikaga Holdings and the Ashikaga Bank are working to reinforce and improve management supervisory functions and business operations under the committee-based management system.

Basic Approach to Corporate Governance
A commitment to management characterized bycompany, and adopted company with committees system

responsibility, and sound, appropriate business operations

at the same time. Since then, the company has been work-

will earn greater trust for the Group from all stakeholders —ing for greater management transparency and objectivity.

customers, shareholders, local communities and employees

In order to become the receiver of the Ashikaga Bank,— and boost corporate value. We see higher standards ofAshikaga Holdings adopted a stock transfer and holding

corporate governance as a management priority. We arecompany scheme to take over the entire business whilecommitted to ensuring transparency, reinforcing manage-

maintaining the corporate status of the Ashikaga Bank.

ment supervisory functions, speeding up decision-making

Against this backdrop, the Ashikaga Bank is Ashikaga

and strengthening business operations.

Holdings’ only direct subsidiary and the officers of Ashikaga

The Ashikaga Bank, the Group’s main company,

Holdings also serve as board members of the Ashikaga

migrated to a company with committees system in June

Bank. With respect to overlapping management functions

2004, under which it had been working to reinforce andbetween Ashikaga Holdings and the Ashikaga Bank, we

improve management supervisory and business operation

will ensure effective and efficient business operations andfunctions. In July 2008, Ashikaga Holdings became agovernance of the Group as a whole through close mutual

holding company which has the Ashikaga Bank as its main

collaboration between each division.

Management Structure
Board of Directors
The Board of Directors is composed of eight directors (ofwhich four are outside directors). It has decision-making

meeting of shareholders concerning the appointment andremoval of directors.

powers over basic management policies and importantCompensation Committee

operational matters, and supervises the execution of duties

The Compensation Committee is composed of four direc-

by directors and executive officers. The outside directors

tors (of which three are outside directors) and decides oncomprise a lawyer rich in experience and with successfulpolicy for decision-making on compensation for individual

track records in corporate turnarounds, a certified public

directors and executive officers, as well as individual

accountant, a business person well versed in finance andcompensation levels.

securities and a member of the regional business community. This system enables us to implement management

Audit Committee

decisions and carry out supervisory tasks from a wide range

The Audit Committee is composed of three directorsof perspectives, resulting in improved management and(of which two are outside directors and the Committee

stronger corporate governance. The board of directors’

Chairman is an outside director) and audits the performancemeeting is held, in principle, once a month.

of duties by directors and executive officers. It also decides
on proposals to be submitted to the annual meeting of

Executive Appointment Committee

shareholders concerning the appointment and removal of

The Executive Appointment Committee is composed

accounting auditors, or their non-reappointment. The Auditof three directors (of which two are outside directors)

Committee is held, in principle, once a month.

and decides on proposals to be submitted to the annual

12

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

Executive Officers and Group Management
Meeting, etc.
Ashikaga Holdings has five executive officers — theChairman and the President (both are Chief Executive
Officers), and three Executive Officers authorized by the
Board of Directors to supervise respectively the Corporate
Planning Department, Business Administration Department
and Auditing Department. While maintaining close
contacts with divisions of the Ashikaga Bank, they supervise

operations on a Group-wide basis, carrying out their
management duties promptly and in a manner befitting
the management of the holding company.
We hold various Group meetings, such as the GroupManagement Meeting, Group ALM Meeting and Group
Compliance Meeting, through which Executive Officers,
to the extent approved by the Board of Directors, discussand decide on important issues concerning business
operations.

Internal Control System
As a regional financial institution, in order to contribute

Compliance Management Group under the Businessto the stability and development of the region and its

Administration Department.

people by ensuring the soundness and appropriatenessof its business and providing a smooth and appropriate
supply of funds and financial services, we observe strict
compliance with laws and regulations, rigorously protect
its customers, and appropriately manages risks in all of thebusiness of Ashikaga Holdings and its subsidiaries (hereafter“the Group”) based on appropriate corporate governance.
At the same time, it recognizes the need to ensure businessefficiency. Based on this recognition, the Company’s Boardof Directors has adopted a “Basic Policy for Internal Controls(Whole Group)” for effective development and implementation of internal controls as below.
1. ‌Conformity of performance of duties by Executive
Officers and employees with laws, ordinances andarticles of incorporation(1) ‌The Group positions compliance as a management

2. ‌Systems for storage and management of information
concerning the performance of duties by Executive
Officers(1) ‌The Group requires Executive Officers to document
their performance of duties and create an appropriate
document management system.
(2) ‌The Audit Committee or personnel designated by theCommittee have access at all times to documents
concerning the performance of duties by Executive
Officers.
3. ‌Rules and other systems for management of risk oflosses(1) ‌The Group has formulated a basic Group risk
management policy to establish and improve risk
management systems. It carries out appropriate risk

priority. It has compiled a basic Group compliance pol-management through a Risk Management Group set

icy to which all directors and employees are subject.

up under the Business Administration Department.

(2) ‌It has established a Compliance Management Group(2) ‌The Board of Directors and the Audit Committee

in the Business Administration Department to improverequire the Risk Management Group in the Businesslegal compliance systems.

Administration Department to periodically file reports(3) ‌The Board of Directors monitors whether or not thecompliance system is functioning effectively, throughsupervision of Executive Officers’ performance andassessment and evaluation at the Audit Committee.
(4) ‌The Group takes a strict line with illegal or wrongfulconduct, including disciplinary penalties. When
directors and employees find evidence of actualor suspected illegality or misconduct, they shouldreport the details to the Audit Committee oron the status of risk controls, and develop andupgrade Group risk management systems.
4. ‌System for ensuring the efficiency of performance of
duties by Executive Officers(1) ‌The Board of Directors decides on basic mattersregarding organizational structure, division of authority, organization of staff positions and other businessmatters, to ensure smooth and appropriate operations.

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201413

(2) ‌Executive Officers carry out their duties in line with thebasic policy of management and division of authority

7. ‌Independence of support staff in the previous article
from Executive Officers
The Group ensures the independence of all support staff

decided by the Board of Directors.

for the Audit Committee, such as in matters that require(3) ‌Executive Officers perform their duties assigned by
the Board of Directors appropriately and effectively tothe prior approval of the Audit Committee including thethe extent that they are authorized, and periodicallyentry and exit of support staff, personnel evaluations, andreport on the status of their performance of duties atcompensation revisions, as they carry out their duties

meetings of the Board of Directors.

from any undue restrictions by Executive Officers.

(1) ‌The Group aims to achieve its business goals through8. ‌Mechanisms for reporting by Executive Officers andemployees to the Audit Committee, and other reportingto the Audit Committee

legal and appropriate means and sound corporate(1) ‌To enable the Audit Committee to deal appropriately

5. ‌Systems for ensuring appropriate conduct ofoperations by the Group

with important matters affecting the Group, we havemanagement of the Group as a whole.
(2) ‌The Group drafts management policies, and works to

specified certain matters the Executive Officers andensure full legal compliance, customer protection andemployees must report on to the Audit Committee.
(2) ‌A member of the Audit Committee may at any time

appropriate risk management.

ask Executive Officers or employees to file reports(3) ‌The Auditing Department verifies the legality andappropriateness of overall operations at the Group,

when this is felt to be necessary for the execution ofand reports its findings to the President and Chief

their duties.

Executive Officer, Executive Officers in charge of

9. ‌Other mechanisms for ensuring effective auditingby the Audit Committee

departments and the Audit Committee.

To ensure the effectiveness of its auditing, the Audit

6. ‌Support staff for the Audit Committee
We have established an Office of Audit Committee andCommittee works together with the Internal Audit

have deployed support staff for the Audit Committee.

Department, which devises its audit plan and reports it,
as well as audit results, to the Audit Committee.

Shareholder’s Meeting
Appoint/
RemoveAshikaga Holdings Co., Ltd.

Appoint/
RemoveSelect/Dismiss

Board of Directors(8, of which 4 are outside directors)
Appoint/SelectRemove/Dismiss

Supervise

ReportReport/Audit
Supervise

Chief Executive Officers
Executive Officers
Earnings control
Internal audit

Management
by operation

Executive Appointment Committee (3, of which 2 are outside directors)
Compensation Committee (4, of which 3 are outside directors)
Audit Committee (3, of which 2 are outside directors)

Group
ALM
Meeting

Risk management
and others

Group
Management
Meeting
Monitor/Supervise

Appoint/
RemoveThe Ashikaga Bank, Ltd.
Select/Dismiss

Board of Directors(7, of which 4 are outside directors)
Appoint/SelectRemove/Dismiss

Supervise

ReportReport/Audit
Supervise

Chief Executive Officer

Group
Compliance
Meeting

Supervise

SuperviseInternal Audit
Department
Accounting
AuditorReport/Apply

Executive Appointment Committee (3, of which 2 are outside directors)
Compensation Committee (4, of which 3 are outside directors)
Audit Committee (3, of which 2 are outside directors)

Executive Officers
Supervise

ALM
Meeting

Management
Meeting

Compliance
Meeting(BPR = Business Process Reengineering)

14

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

CreditPortfolio
Meeting

IT
Investment
Meeting

BPR
Promotion
Meeting

SuperviseInternal Audit
Department*Collaborates
with Audit
Committee/
Internal Audit
Department

Risk Management at the Ashikaga Holdings GroupIn addition to managing each of the various risks that we face individually, the Group has in place and iscommitted to improving an overall risk management framework to control risk within acceptable limits.
It does this by forming a clear idea of overall possible risk limits, and then comparing and contrastingthem with the financial resources of the Group.

ALM and risk management frameworks
We manage risk based on the Comprehensive Group Risk

the Ashikaga Bank includes the compilation of theManagement Policy compiled by the Board of Directors

Comprehensive Risk Management Policy and theof Ashikaga Holdings. We have established a Group ALM

establishment of an ALM Meeting as a management-level

Meeting as a management-level committee charged

committee, as with Ashikaga Holdings. In addition, wewith implementing specific measures laid down in theare creating a Risk Management Division to supervise risk

Comprehensive Group Risk Management Policy. The

management, and divisions in charge of management ofnecessary decision-making authority has been vested inindividual risk categories.

this Council.
The Group ALM Meeting ensures that management

The Group ALM Meeting and the ALM Meeting areheld on a monthly basis, attended by full-time (Headalways focuses on the risk-return balance and takes

Office) executives at Ashikaga Holdings and the Ashikaga

measures to accelerate and streamline decision-making, by

Bank, and Audit Committee members, and receive reports

ensuring that reviews and consultation are carried out with

about progress in comprehensive risk management andrisk and revenue management closely linked, while main-

management of individual risk categories. In addition, theytaining due controls on risk. In addition, we have set up a

discuss possible steps to be taken to deal with changes in

Risk Management Group in the Business Administration

the internal or external business environment.

Department, to ensure oversight and integration of various
kinds of risk management.
Based on Group policy, risk management at

To ensure effective communication regarding risk, wehave various information-relaying systems in place. We plan
to strengthen our mechanisms for gathering information.

Comprehensive Risk Management
We use the Value-at-Risk (VaR) method to quantify thethe total amount does not exceed core capital. Based on

various types of risk that arise in our various businesses

risk capital, we establish risk limit amounts every six months.

including lending and market trading, and apply the results

During the term, we ensure sound management byof such analysis in our business management (comprehen-respecting risk limits in risk-taking and risk control. In

sive risk management). At the Ashikaga Bank, we use theaddition, we confirm risk quantification results and the

Risk Capital System as a specific tool for comprehensively

appropriateness and effectiveness of risk management

managing risk.

methods using back-testing and stress-testing.

In concrete terms, we allocate capital (risk capital) for

We have established a clear-cut Comprehensive Risk

internal management purposes within the scope of credit

Management Policy and set of rules, governing basic

risk, market risk, strategic stock investment risk, banking

approaches to the Risk Capital System, and methods ofaccount interest rate risk and operational risk, ensuring that

evaluation and monitoring of risk.

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

15

Risk Management Framework
Ashikaga Holdings Co., Ltd.
Executive Appointment Committee

Governance

Board of Directors

Audit Committee
Compensation Committee

Basic Risk
Management
PolicyComprehensive Group Risk
Management Policy

Conferring
Entities(decision-making
bodies)Group ALM Meeting

Department
responsible foroversight of risk
management

Risk Management Group in Business
Administration Department

Group Management Meeting

Reports, Consults(risk status, response measures)

Instructs(risk management readiness, etc.)

The Ashikaga Bank, Ltd.
Executive Appointment Committee

Governance

Board of Directors

Audit Committee
Compensation Committee

Basic Risk
Management
PolicyComprehensive Risk Management
PolicyConferring
Entities(decision-making
bodies)Credit Portfolio Meeting

Division
responsible foroversight of risk
management

ALM Meeting

Management Meeting

Risk Management Division

Riskmanagement
working group

Credit Portfolio
Working Group

Types of risk

Credit risk

Individual risk
management
policies

Credit risk
management
policyMarket risk
management
policyDivision in
charge of risk
management

Risk Management
Division, Loan
Supervision
DivisionInternational
and Treasury
Administration
Division

ALM Working GroupOperational Risk Working GroupOperational risk
Market risk

Division fortaking action
when riskmaterializes

Liquidity risk

Administrative
risk

System risk

Liquidity risk
management
policyAdministrativerisk management policy

System risk
management
policy3 Divisions(*1)

Operation
Planning
Division

Legal risk

Branches, Head Office divisions, subsidiaries

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

Tangible asset
risk

Reputational
risk

Operational risk management policy

IT Planning and Compliance
Administration Management
Division
Division(*1)=Treasury and Securities Division, International and Treasury Administration Division, Risk Management Division

16

Personnel risk

Personnel
Division

General Affairs
OfficePublicRelations
OfficeCredit risk management
Credit risk is the risk of losses from reduction or loss of theclarifies the risk, etc. that needs to be appraised and man-value of loans and bills discounted and other assets held byaged, and, in the conviction that credit risk management is

the Bank due to deterioration of the financial standing ofan essential prerequisite for ensuring sound financial healthborrowers.

and profitability, adopts the following policies to further

Based on the credit risk management policy approved

control risk.

at a meeting of the Board of Directors, the Ashikaga Bank
Credit policy• ‌The Bank’s credit policy clearly lays down basic policy for community contributions, borrower profiles,
appropriate lending practices, soundness of assets, and ensuring adequate levels of profitability.
• As‌ a regional financial institution with its core business based in the North Kanto area centering on Tochigi
Prefecture, our lending activities chiefly target regional small-and-medium-sized enterprises, individual
business owners and individuals who have close relations with this area.

Credit risk
management• Division‌in charge of credit risk management, which is organizationally and functionally independent fromthe business promotion, credit-screening and management divisions, is responsible for planning and operational management of borrower rating systems, asset self-assessment and write-offs and provisions to thereserve for loan losses. In addition, it monitors loan assets and is the specialized organization responsible forcomprehensive oversight of the credit portfolio.
• In‌ addition, the Credit Portfolio Meeting regularly deliberates and reviews the Bank’s credit risk status andissues on an organization-wide basis.

Borrower rating
system• Under‌
our borrower rating system, borrowers are divided into 14 categories based on quantitative analysisof their assets and qualitative analysis of the business environment and other issues they face. The borrower rating system is the basis of credit risk management. It enables instant appraisal of changes in credit
circumstances at borrowers, helps make the credit screening decision-making process more efficient, andhelps us set interest rates on loans and acts as a standard for credit portfolio management.

Credit portfolio
management• ‌We analyze portfolio characteristics in terms of borrower credit rating, industrial sector, geographical area
and other criteria, and carry out regular reviews of increases or decreases in credit in specific corporategroups or industries, and strengthen monitoring to ensure credit risk is not overly concentrated in certain
sectors. In addition-, in tandem with strengthening measures for loans for SMEs and individuals, we aim tocreate a portfolio that is capable of credit asset small-lot diversification and generation of steady earnings.

Quantification of
credit risk

• ‌We calculate credit risk amounts on a monthly basis using credit risk measurement systems. The amount of
measured credit risk and changes in such amount are mainly analyzed to identify contributing factors, anda report is made to the ALM Meeting regarding future measures.

Market risk management
Market risk is the risk of losses from changes in the value

appropriate way based on a comparison of our own

of financial assets and liabilities held by the Ashikaga Bank,financial resources and amount at risk, while paying due

due to changes in market interest rates, foreign exchange

consideration to secondary risk from the above-mentioned

rates and stock market prices.

market transactions.

When we engage in market transactions, we carry out

We set clear risk management parameters, mea-

prior investigations and analyses, and make investments

surement (monitoring) standards, control standards andbased on appraisal of identified risk. In addition to ensuring

reporting measures for market transactions, strategic stock

market liquidity and a suitable balance between returns

investments and interest rate risk affecting banking accountand risk, we apply risk control parameters, in as much astransactions. Every six months, we set risk management

they are feasible, to use and manage financial derivative

benchmarks (risk limits, loss limits, etc.) under a strictproducts. Market risk management is carried out in an

management regime.
ASHIKAGA HOLDINGS CO., LTD. Annual Report 201417

Liquidity risk management
Liquidity risk is the risk of incurring a loss due to difficulties

and loan balances and managing indicators such as upper

in raising funds needed for settlements and other purposes,

limits for fund procurement, in addition to using major

or being forced to procure funds at a higher interest ratebenchmarks such as funding gaps and the balance ofthan normal.

liquidity assets.

The Ashikaga Bank has positioned itself to respond

In a response to liquidity emergencies (establishment

swiftly to all liquidity risk situations from normalof a crisis headquarters, liaison and reporting mechanisms,banking operations to emergencies, and has compiled

response measures, delegation of decision-making, andcountermeasures for each possible situation. Specifically, inchain of command), we have established a liquidity risk

conventional cash flow management operations, we avoid

contingency plan. Based on it, we carry out regular drills toincreasing liquidity risk by managing trends in deposits

ensure its effectiveness during an actual emergency.

Operational risk management
Because operational risk is very diverse, comprising admin-

At the same time, operational risk is supervised on an

istrative risk, system risk, legal risk, personnel risk, tangible

integrated basis by the Risk Management Division, because

asset risk and reputational risk, it is jointly managed by a

all of our operations and divisions are subject to risk that

range of different divisions.

could prevent continuation of business.

Management ofadministrative risk

• Administrative‌risk refers to the risk of losses due to errors, accidents, fraud or other irregularity on the partof executives or other employees.
• Depending‌on the nature of business and risk profile, the Bank has in place administrative regulations thatare comprehensive and compliant with laws and regulations, enabling us to ensure that all employees
from executives down perform their administrative duties correctly, without accidents or fraud or otherirregularity.
• ‌We introduced a registration and analysis system for administrative error, enabling systematic logging ofa wide range of administrative errors and accidents that occur during the course of business. By using
the accumulated data, we strengthened our administrative risk management readiness by establishingappropriate processes for identification, evaluation, monitoring, control and reduction of administrative risk.

Management ofsystem risk

• System‌risk is the risk of losses arising from computer system failure, system malfunction due to operator
error, or abuse of computer systems.
• ‌The Bank has compiled a system risk management policy, to serve as a basic policy for taking measures
to assure the security and reliability of computer systems. In the event that computers stop functioning
normally, due to causes such as disaster impact, we have duplicated backbone systems and established acontingency plan for dealing with emergencies. We are taking measures to ensure we can respond swiftly
to such failure scenarios.

Management of
information security• ‌The adoption of appropriate security policies for information assets is a key requirement not only forcontinuation and stable conduct of our business, but also for upholding our public reputation.
• ‌We have compiled a Data Security Policy as a management policy for due protection of information assets
in our possession. We take care to rigorously manage all information relating to our customers, having
created information asset manager positions at Head Office and in branches, as well as an information
security management system.

Business continuity
system• Natural‌disasters, computer-system failures and epidemics of infectious diseases are among the events that
can trigger an unavoidable suspension of operations. In the event of an emergency situation, we have inplace business continuation measures that enable us to quickly resume or maintain as many core services
as possible, as a matter of public duty.
• Under‌
our basic policy on creating a business continuity system, the roles of individual employees areclarified. We are committed to ensuring as rapid a response to a crisis as possible.

18

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

System of Legal Compliance at the Ashikaga Holdings GroupThe Group has positioned compliance as one of the most important priorities facing management, andhas drawn up a basic compliance policy for the Group.
All employees from executives down are constantly aware of the public roles and responsibilities that
we have as a banking group. We are committed to compliance with laws, regulations and social norms,
establishment of trust through sound business management, and to pursuing our corporate activities in a
spirit of sincerity and fairness.

Management awareness and response
Management is fully aware that ensuring rigorous legal

Committee audits and examines whether or not thesecompliance is one of the most important priorities it faces,

mechanisms are functioning effectively.

and directors of the board and executive officers them-

Executive officers are empowered to carry out tasks

selves take care to avoid violation of laws and regulations

set by the Board of Directors, and to execute businessduring the performance of duties.

operations. Powers of decision-making are vested in

Ashikaga Holdings has adopted the committee-based

chief executive officers after approval from the Groupsystem of corporate governance, with establishment

Management Meeting, Group ALM Meeting and Groupof Executive Appointment, Audit and Compensation

Compliance Meeting. Chief executive officers are thus

committees, and established executive officer posts. Thissubject to restraints on individual actions. Executive officers

clearly separates management oversight and execution ofalso must report at least once every three months to thebusiness.

Board of Directors on their own performance in fulfilling

The Board of Directors establishes internal controls

duties.

including our compliance system, while the Audit

Instilling rigorous compliance throughout the Ashikaga BankTo ensure a culture of compliance, it is necessary to ensureof compliance through meetings of all division, officethat compliance awareness and commitment permeatesand branch managers of the Bank. At the same time,from management downward and throughout the Bank

specific compliance action plans are drawn up based on aorganization, using various platforms and mechanisms.

compliance manual and action guidelines, to ensure theTo achieve this, the management instills the concept

effectiveness of compliance awareness-raising.

The Group’s basic compliance policy comprises the following concepts
Ensuring trust

In awareness of its social responsibilities and public mission, the Group provides comprehensive financial
services rooted in the community, engages in sound business operations and ensures public trust.

Compliancewith laws andregulations

The Group regards compliance with laws and regulations as a cardinal priority for management. In addition
to legal compliance, the Group will engage in its corporate activities in a spirit of sincerity and fairness,without overstepping social norms or conventions.

Measures against
antisocial forces

The Group will take decisive action against forces that threaten orderly public activity and security, or that
undermine the development of a sound economy and society.

Managementtransparency

The Group shall, in a fair, timely, and appropriate way, disclose management information to customers,
employees, shareholders, and local communities and industries, as a trust-building measure.

Creating andupholding compliance frameworks

The Group will thoroughly familiarize all employees with the importance of compliance, and establish andmaintain a compliance framework based on implementation and planning of internal controls including
sets of regulations, creation of dedicated organizations and employee training programs.

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201419

Improving compliance effectivenessWe have compiled the following seven ComplianceIn addition, the Bank has set up a Compliance Working

Principles as a behavioral guideline for Group employees,

Group, which checks compliance progress and status

who will do their best to abide by the principles.

and discusses important matters every month, thereby
improving the effectiveness of our compliance measures.

Seven Compliance Principles

We have incorporated compliance programs into all• ‌Comply with laws and regulations affecting our businessof our training courses for different seniority grades at theand social norms

Bank, to thoroughly instill a sense of the importance of legal• Always keep promises

compliance in all employees from executives downwards.

• Do not mix private and public businessIn fiscal 2014 as well, we compiled a compliance• Keep your surroundings clean and tidy

program to ensure systematic compliance with laws and• Be scrupulously careful about information management

regulations, and it is now in operation.

• Uphold and improve workplace order• ‌Thoroughly internalize the importance of reporting,liaising and consulting

Compliance organizations and measures for the future
The Group has established a Compliance Management

and branch level, we have also established the posts ofGroup within the Business Administration Department toCompliance Manager and Compliance Officer in every

further strengthen our compliance framework.

division, office and branch.

In addition, in order to ensure compliance with laws
and regulations at the Ashikaga Bank at the Head Office

In the future, we will strive to further develop our compliance frameworks so as to further deepen public trust.

Compliance System
Ashikaga Holdings Co., Ltd.

Board of Directors

Executive Appointment Committee
Compensation Committee

Group Compliance Meeting

Corporate Planning Department

Audit Committee

Business Administration Department

Monitor/Supervise

The Ashikaga Bank, Ltd.

Auditing Department
Report/Application

Board of Directors

Executive Appointment Committee
Compensation Committee

Compliance Meeting

Audit Committee
Compliance Working Group
Oversight Division(Compliance Management Division)
Oversight

Head OfficeCompliance Manager
Compliance Officer

20

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

Oversight
Management/GuidanceConsultation/Report

BranchesCompliance Manager
Compliance Officer

Measures to protect customer interests
The Group recognizes that establishment of a management

4. Management of customer information

framework for protection of the customer’s interests is

Except where otherwise laid down under laws andvital not only for the customer and the enhancement ofregulations, information concerning customers iscustomer convenience, but also for the soundness andmanaged within the parameters deemed necessary for

propriety of Group business operations. Accordingly, itachievement of purposes relating to such information. In

has established the following management policies for

addition, we take measures to prevent external leakage

protection of customer interests.

of, loss of or damage to information about customers.

Executives and employees recognize that continuous
assessment and improvement of their own performance

5. Sharing customer information within the Groupof duties from the customer’s perspective are important

To ensure greater protection and convenience for theto safeguarding customer interests, and are committed tocustomer, and better risk management within the Group,

improvement.

customer information is shared by Ashikaga Holdings
with its subsidiaries (including consolidated subsidiaries).

1. Ensuring customer understanding of explanations

To protect customer information subject to shared use

We have mechanisms to ensure full and due customer

within the Group, we set clear limits on the category ofunderstanding of our +explanations of their transactions

information used, whom it is shared among, and what itwith the Group, as well as with subsidiaries (credit

is used for. We also have in place management mecha-transactions (loan contracts and related collateral andnisms to ensure appropriate handling in conformity withguarantee agreements), acceptance of deposits, etc.,

laws protecting personal information, and with guide-

domestic and foreign exchange transactions, marketing,lines and laws and regulations relating to protection ofintermediary services and solicitation relating to financial

personal information specific to the financial sector.

products).
6. Management of conflict of interest
2. Customer support

In transactions between the Group and its customers, theWe have established within the Group a general officeGroup protects customers we are advising from adverse

for responding appropriately when a customer has

effects, such as firewalls between different business sec-

an inquiry, seeks consultation, or expresses a wish ortions, to avoid events that constitute conflict-of-interest

complaint. We are committed to improvement in all ouror other impropriety.

operations, not just to resolution of single issues. At theIn particular, in cases where Ashikaga Holdings andsame time, we always treat the customer with friendly

its subsidiaries provide multiple services to the sameand appropriate courtesy, without letting personalcustomer, we have in place appropriate safeguards suchfeelings get in the way, and take care to ensure provision

as firewalls to prevent abuse of customer informationof financial products and services that complies withand conflict-of-interest situations (including firewalls withregulations.

affiliated companies), and measures to prevent unfair
trading such as selling tie-in products.

3. Using the Alternative Dispute Resolution system
We will use the Alternative Dispute Resolution (ADR)

7. Management of outsourcing

model of dispute settlement without resort to courts,

When Ashikaga Holdings outsources operations to exter-

which prioritizes the customer more and better suits thenal providers, it ensures the outsourced task is performed

needs of an aging population and the diversification andexactly as required and that both customer information

increasing complexity of financial products.

and customer interests are handled appropriately.

The Bank has concluded a basic agreement on
procedures with the Japanese Bankers Association, a des-8. Management of other operations

ignated ADR organization (institution designated under

We ensure appropriate management of operations

the Banking Act as a dispute resolution organization).

that we judge to be essential for the protection andconvenience for the customer.
ASHIKAGA HOLDINGS CO., LTD. Annual Report 201421

Consolidated Financial Statements

Consolidated Balance Sheet
March 31, 2014

Ashikaga Holdings Co., Ltd. and Consolidated Subsidiaries

Millions of Yen
2014
2013

ASSETS:Cash and due from banks (Notes 3, 10, and 20)....................................................................
Call loans and bills bought (Note 20)...........................................................................................
Monetary claims bought (Note 20)...............................................................................................
Trading account securities (Notes 4 and 20)...........................................................................
Securities (Notes 4 and 20).................................................................................................................
Loans and bills discounted (Notes 6, 10, 20, and 24).........................................................
Foreign exchanges..................................................................................................................................
Tangible fixed assets (Note 7)...........................................................................................................
Intangible fixed assets (Note 8).......................................................................................................
Asset for retirement benefits (Note 13)......................................................................................
Deferred tax assets (Note 19)............................................................................................................
Customers’ liabilities for acceptances and guarantees (Note 9).................................
Other assets (Note 10)...........................................................................................................................
Allowance for loan losses....................................................................................................................
Total...........................................................................................................................................................

¥  344,369
1,520
8,180
4,266
1,176,469
3,958,083
5,969
23,37893,141
3,357
2,027
15,333
20,307(44,051)¥5,612,355¥  197,870
129,4608,664
4,288
1,186,910
3,775,974
7,451
23,780100,594
1,818
2,292
17,27420,804(43,039)¥5,434,144$ 3,345,992
14,776
79,48841,451
11,430,916
38,457,863
58,000227,153904,989
32,626
19,703
148,988
197,313(428,017)$54,531,243

LIABILITIES AND EQUITY
LIABILITIES:
Deposits (Notes 10 and 20)................................................................................................................
Negotiable certificates of deposit (Note 20)...........................................................................
Call money and bills sold (Note 20)..............................................................................................
Payables under securities lending transactions (Notes 10 and 20)...........................
Borrowed money (Notes 10, 11, and 20)...................................................................................
Foreign exchanges..................................................................................................................................
Other liabilities (Note 12).....................................................................................................................
Provision for directors’ bonuses .....................................................................................................
Liability for retirement benefits (Note 13).................................................................................
Provision for directors’ retirement benefits.............................................................................
Provision for reimbursement of deposits..................................................................................
Provision for contingent losses ......................................................................................................
Provision for point card certificates..............................................................................................
Provision for losses on disaster........................................................................................................
Acceptances and guarantees (Note 9).......................................................................................
Total liabilities......................................................................................................................................

¥4,943,137
171,040
6,175
5,965
180,644763
43,022
48
2,779
189
1,606
424
88
—
15,333¥5,371,220¥4,745,811
150,927—
71,951
121,704550
43,009
56
1,269
254
1,518
326
74
70
17,274¥5,154,800$48,028,926
1,661,882
60,00057,966
1,755,194
7,418
418,020468
27,0101,838
15,604
4,126
863—
148,988$52,188,303¥   67,510$ 1,141,620

37,50095,78056,730257,521—282,018
732,367
2,156,005

21,954(132)—
21,822
279,343¥5,434,144

196,564(301)(9,329)186,934
2,342,940$54,531,243

EQUITY (Notes 14 and 15):
Common stock:
Authorized, 990,000 thousand shares; Issued, 333,250 thousands
shares in 2014 and 2,700 thousands shares in 2013........................................................ ¥  117,495
Preferred stock:
Authorized, 100 thousand shares:
Issued, nil in 2014 and 30 thousands shares in 2013.......................................................
—
Capital surplus............................................................................................................................................
29,025Retained earnings....................................................................................................................................
75,375
Total shareholders’ equity
221,896
Accumulated other comprehensive income.........................................................................
Unrealized gains on available-for-sale securities (Note 5)
20,230
Deferred losses on hedges(30)
Defined retirement benefit plans(960)
Total accumulated other comprehensive income................................................
19,239Total equity.............................................................................................................................
241,135
TOTAL...................................................................................................................................................................... ¥5,612,355
See notes to consolidated financial statements.

22

Thousands of
U.S. Dollars(Note 1)2014

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

Consolidated Statement of Income
Year Ended March 31, 2014

Ashikaga Holdings Co., Ltd. and Consolidated Subsidiaries

Millions of Yen
2014
2013

INCOME:Interest income:Interest on loans and bills discounts.....................................................................................
Interest and dividends on securities......................................................................................
Interest on call loans and bills bought.................................................................................
Interest on deposits with banks...............................................................................................
Other interest income....................................................................................................................
Fees and commissions..........................................................................................................................
Other operating income......................................................................................................................
Other income (Note 17).......................................................................................................................
Total income..................................................................................................................................
EXPENSES:Interest expenses:
Interest on deposits.........................................................................................................................
Interest on negotiable certificates of deposit..................................................................
Interest on call money and bills sold....................................................................................
Interest on payables under securities lending transactions...................................
Interest on borrowed money....................................................................................................
Other interest expenses................................................................................................................
Fees and commissions payments..................................................................................................
Other operating expenses..................................................................................................................
General and administrative expenses.........................................................................................
Provision of allowance for loan losses.........................................................................................
Other expenses (Note 18)...................................................................................................................
Total expenses..............................................................................................................................
INCOME BEFORE INCOME TAXES........................................................................................................
INCOME TAXES (Note 19):.........................................................................................................................
Current............................................................................................................................................................
Deferred.........................................................................................................................................................
Total income taxes....................................................................................................................
NET INCOME.......................................................................................................................................................

Thousands of
U.S. Dollars(Note 1)
2014

¥ 57,751
11,196204
187
116
21,317
3,437
13,862
108,073¥59,634
8,846
305
146
117
19,0496,496
4,016
98,612$  561,130
108,788
1,986
1,825
1,135
207,126
33,395
134,691
1,050,075

2,487
158
19
62
1,871
24
5,759
1,461
57,547
6,791
3,968
80,151
27,921

2,895
171
3
14
3,413
10
5,762
102
58,156
3,749
5,943
80,222
18,38924,170
1,536
186
610
18,188240
55,96014,197559,149
65,98438,559778,779
271,297

2,708
898
3,607
¥ 24,314

1,770
1,214
2,984
¥15,405

26,3208,729
35,049$  236,248

Yen

PER COMMON SHARE INFORMATION (Note 16):
Basic net income per share................................................................................................................
Cash dividends applicable to the year (Note 14).................................................................

¥69.85
4.00

U.S. Dollars¥36.05
—

$0.68
0.04

See notes to consolidated financial statements.

Consolidated Statement of Comprehensive Income
Year Ended March 31, 2014

Ashikaga Holdings Co., Ltd. and Consolidated Subsidiaries

Millions of Yen
2014
2013

Thousands of
U.S. Dollars(Note 1)2014

NET INCOME.......................................................................................................................................................

¥24,314¥15,405$236,248

OTHER COMPREHENSIVE (LOSS) INCOME (Note 22)
Unrealized (losses) gains on available-for-sale securities................................................
Deferred gains (losses) on hedges................................................................................................
Total other comprehensive (loss) income................................................................................
COMPREHENSIVE INCOME (Note 22)................................................................................................

(1,724)101(1,622)¥22,691

12,969(132)
12,837¥28,242(16,756)987(15,769)$220,479

See notes to consolidated financial statements.

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201423

Consolidated Statement of Changes in Equity
Year Ended March 31, 2014

Ashikaga Holdings Co., Ltd. and Consolidated Subsidiaries

Millions of Yen

Commonstock(Note 14)

Preferredstock(Note 14)

CapitalsurplusRetainedearnings

Treasurystock

Accumulated othercomprehensive income
Unrealized
gains onDefinedavailableDeferred retirementfor-salelosses on
benefitsecurities
hedgesplans

BALANCE, APRIL 1, 2012....................................... ¥ 67,510
Net income..............................................................
—Cash dividends......................................................
—Net changes except forshareholders’ equity during the year....
—Net change in the year....................................
—BALANCE, MARCH 31, 2013................................ 67,510
Net income..............................................................
—Cash dividends ....................................................
—
Purchases of treasury stock...........................
—
Retirement of treasury stock........................
—
Issuance of new shares.................................... 37,500
Net changes except forshareholders’ equity during the year....
—Net change in the year.................................... 49,985
BALANCE, MARCH 31, 2014................................ ¥117,495¥37,500——¥95,780——¥46,995
15,405(5,670)¥    ———¥ 8,984
—
—

¥ —
—
—

¥ —
—
—

¥256,770
15,405(5,670)——37,500————(37,500)——
95,780———(79,240)
12,485—
9,735
56,73024,314(5,670)
—
—
—

—
—
—
—
—
(79,240)
79,240—12,96912,96921,954
—
—
—
—
—

(132)
(132)
(132)
—
—
—
—
—

—
—
—
—
—
—
—
—

12,837
22,572
279,343
24,314(5,670)(79,240)—
24,971—(37,500)¥    ——(66,755)¥29,025—
18,644¥75,375——¥    —(1,724)(1,724)¥20,230

101
101¥ (30)(960)(960)¥(960)(2,583)(38,208)¥241,135

CapitalsurplusThousands of U.S. Dollars (Note 1)
Accumulated othercomprehensive income
Unrealized
gains onDefinedavailableDeferred retirement
Retained
Treasury
for-salelosses on
benefitearnings
stock
securities
hedgesplans$930,631———(769,927)
121,313$551,211
236,248(55,091)———$     ———
(769,927)
769,927—$213,320—————$(1,289)—————$    ——————$2,714,181
236,248(55,091)(769,927)—
242,626—(648,613)$282,018—
181,157$732,367——$     —

(16,756)(16,756)$196,564

987
987$  (301)(9,329)(9,329)$(9,329)(25,097)(371,241)$2,342,940

Commonstock(Note 14)

Preferredstock(Note 14)BALANCE, MARCH 31, 2013................................ $  655,946 $364,361
Net income..............................................................
——Cash dividends ....................................................
——
Purchases of treasury stock...........................
——
Retirement of treasury stock........................ 364,461 (364,361)
Issuance of new shares.................................... 121,313—
Net changes except forshareholders’ equity during the year....
——Net change in the year.................................... (485,674)—
BALANCE, MARCH 31, 2014................................ $1,141,620 $     —See notes to consolidated financial statements.

24

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

Total
equityTotalequityConsolidated Statement of Cash Flows
Year Ended March 31, 2014

Ashikaga Holdings Co., Ltd. and Consolidated Subsidiaries

Millions of Yen
2014
2013
OPERATING ACTIVITIES:
Income before income taxes........................................................................................................................................................
Adjustments for:
Income taxes paid.......................................................................................................................................................................
Depreciation and amortization...........................................................................................................................................
Impairment loss............................................................................................................................................................................
Amortization of goodwill........................................................................................................................................................
Increase (decrease) in allowance for loan losses......................................................................................................
Decrease in provision for directors’ bonuses.............................................................................................................
Increase in asset for retirement benefits.......................................................................................................................
Decrease in liability for retirement benefits................................................................................................................
(Decrease) increase in provision for directors’ retirement benefits.............................................................
Increase in provision for reimbursement of deposits...........................................................................................
Increase in provision for contingent losses.................................................................................................................
Increase (decrease) in provision for point card certificates...............................................................................
Decrease in provision for loss on disaster....................................................................................................................
Interest income (accrual basis)............................................................................................................................................
Interest expenses (accrual basis)........................................................................................................................................
Gain related to securities........................................................................................................................................................
Foreign exchange gains..........................................................................................................................................................
Losses on disposal of fixed assets......................................................................................................................................
Losses on reduction of fixed assets..................................................................................................................................
Net increase in loans and bills discounted..................................................................................................................
Net increase in deposit............................................................................................................................................................
Net increase in negotiable certificates of deposit...................................................................................................
Net increase (decrease) in borrowed money (excluding subordinated borrowings)......................
Net decrease (increase) in due from banks (excluding deposit paid to Bank of Japan).................
Net decrease in call loans.......................................................................................................................................................
Net decrease (increase) in trading account securities..........................................................................................
Net increase in call money.....................................................................................................................................................
Net (decrease) increase in payables under securities lending transactions...........................................
Net decrease (increase) in foreign exchanges — assets.....................................................................................
Net increase in foreign exchanges — liabilities.......................................................................................................
Interest and dividends received (cash basis)..............................................................................................................
Interest paid (cash basis).........................................................................................................................................................
Other, net..........................................................................................................................................................................................
Total adjustments........................................................................................................................................................................
Net cash provided by (used in) operating activities..............................................................................................
INVESTING ACTIVITIES:
Purchases of securities.............................................................................................................................................................
Proceeds from sales of securities.......................................................................................................................................
Proceeds from redemption of securities......................................................................................................................
Purchases of tangible fixed assets.....................................................................................................................................
Proceeds from sales of tangible fixed assets..............................................................................................................
Purchases of intangible fixed assets................................................................................................................................
Other, net..........................................................................................................................................................................................
Net cash provided by investing activities.....................................................................................................................
FINANCING ACTIVITIES:
Proceeds from subordinated borrowings....................................................................................................................
Repayments for subordinated borrowings.................................................................................................................
Proceeds from issuance of common stock.................................................................................................................
Cash dividends paid...................................................................................................................................................................
Purchases of treasury stock...................................................................................................................................................
Other, net..........................................................................................................................................................................................
Net cash used in financing activities...............................................................................................................................
Effect of exchange rate changes on cash and cash equivalents............................................................................
Net increase (decrease) in cash and cash equivalents..................................................................................................
Cash and cash equivalents, beginning of year..................................................................................................................
Cash and cash equivalents, end of year (Note 3).............................................................................................................

¥ 27,921¥ 18,389$  271,297(2,565)
3,702
71
6,202
1,012
(8)
(1,076)
(446)
(65)
88
97
14
(70)
(69,456)
4,624(9,758)(1,515)34—(182,108)
197,325
20,11358,94040,808
127,749
13
6,175(65,985)
1,481
213
70,772(5,448)(1,674)
199,260
227,182

(266)
3,814
177
6,202
(5,479)(16)(887)(14,787)
34
78
63
(6)
(99)
(69,049)
6,508(1,662)(1,500)5476(133,424)
88,495
11,013(99,943)(35,496)
56,149(1,033)—
71,951(1,786)
114
71,311(9,760)6,298(52,860)(34,470)(24,924)
35,976692
60,265
9,835(85)(10,459)(4,338)
(632)
855
950
139
(684)
(674,864)
44,930(94,817)(14,726)340—(1,769,422)
1,917,268
195,425572,681396,5021,241,255
133
60,000(641,134)
14,397
2,073
687,646(52,939)(16,267)
1,936,069
2,207,365(385,180)
189,879
217,544(1,605)
48
(647)
(4)
20,035(444,920)
205,402275,964(1,870)
709
(412)
78
34,952(3,742,519)
1,844,926
2,113,727(15,601)
469(6,289)(42)
194,672

70,000(70,000)
24,971(5,670)(79,240)—(59,939)29
187,307
155,060¥342,368———(5,670)—(10)(5,680)28(5,170)160,230¥155,060

680,140(680,140)
242,626(55,091)(769,927)—(582,392)
286
1,819,932
1,506,614$3,326,546

Millions of Yen
2014
2013
NON-CASH FINANCING ACTIVITY
Retirement of treasury stock.........................................................................................................................................................

Thousands of
U.S. Dollars(Note 1)
2014

¥79,240¥—

Thousands of
U.S. Dollars(Note 1)
2014
$769,927

See notes to consolidated financial statements.

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201425

Notes to Consolidated Financial Statements
Year Ended March 31, 2014

Ashikaga Holdings Co., Ltd. and Consolidated Subsidiaries

1. BASIS OF PRESENTATION
The accompanying consolidated financial statements of Ashikaga
Holdings Co., Ltd. (the “Company”) and its consolidated subsidiaries(together, the “Group”) have been prepared in accordance with theprovisions set forth in the Japanese Financial Instruments and Exchange
Act and its related accounting regulations, in accordance with the
Enforcement Regulation for the Banking Act, and in accordance withaccounting principles generally accepted in Japan, which are different
in certain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated
financial statements issued domestically in order to present them in aform which is more familiar to readers outside Japan.
The consolidated financial statements are stated in Japanese yen,
the currency of the country in which the Company is incorporated
and operates. As permitted by the Japanese Financial Instruments andExchange Act, amounts less than one million yen have been omitted.
As a result, the totals do not necessarily agree with the sum of theindividual amounts. Yen amounts, other than per share amounts, havebeen rounded down to millions of yen. Yen per share amounts havebeen rounded down to two decimal places.
The translations of Japanese yen amounts into U.S. dollar amounts
are included solely for the convenience of readers outside Japan andhave been made at the rate of ¥102.92 to U.S. $1, the rate of exchange
at March 31, 2014. Such translations should not be construed as
representations that the Japanese yen amounts could be converted
into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation—The consolidated financial statements include theaccounts of the Company and its significant subsidiaries. There werefour consolidated subsidiaries as of March 31, 2014 and 2013.
Under the control and influence concept, those companies inwhich the Company, directly or indirectly, is able to exercise control
over operations are fully consolidated.
All consolidated subsidiaries have a fiscal year ending on March 31,
which is the same as the fiscal year of the Company.
The consolidated financial statements do not include the accountsof one subsidiary in 2014 and two subsidiaries in 2013, because the total
assets, total income, net income, and retained earnings of the entity
would not have had a material effect on the consolidated financial
statements.
Investments in the unconsolidated subsidiary and associatedcompanies were stated at cost. If the equity method of accounting had
been applied to the investments in these companies, the effect on theaccompanying consolidated financial statements would not be material.
All significant intercompany balances, transactions, and unrealized
profits included in assets were eliminated in consolidation.
Goodwill, which was included in intangible fixed assets, represents
the difference between the cost of an acquisition and the fair valueof the net assets of the acquired subsidiary at the date of acquisition.
Goodwill on acquisition of subsidiaries is amortized using the straightline method over 20 years (see Note 8).
b. Trading Account Securities—Trading account securities, which areheld for the purpose of earning capital gains in the short term, arereported at fair value and the related unrealized gains and losses areincluded in “Other operating income (expenses)” in the consolidated
statements of income.

26

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

c. Securities—Securities are classified and accounted for, depending on
management’s intent, as follows: (1) held-to-maturity debt securities,
which are expected to be held-to-maturity with the positive intent
and ability to hold to maturity, are stated at amortized cost using thestraight-line method; (2) investments in unconsolidated subsidiarythat are not accounted for by the equity method are stated at cost
determined by the moving-average method; and (3) available-for-salesecurities are stated at fair value with unrealized gains and losses, net of
applicable taxes, reported in a separate component of equity. Securities
whose fair values cannot be reliably determined are stated at cost
determined by the moving-average cost method.
For other-than-temporary declines in fair value, securities are
reduced to net realizable value by a charge to income.
d. Tangible fixed assets (except for leased assets)—Tangible fixed assets(except for leased assets) are stated at cost, less accumulated depreciation. Depreciation of tangible fixed assets owned by the consolidatedbanking subsidiary is computed by the declining balance method.
The range of useful lives is from 3 to 50 years for buildings and from
3 to 20 years for equipments.
Depreciation of tangible fixed assets owned by the other subsidiaries are computed by the declining-balance method in estimated useful
lives.
Depreciation of leased assets from finance lease transactions that
do not deem to transfer ownership of the leased property to the lessee
is computed using the straight-line method over the respective lease
periods. The residual value of lease assets is determined using theguaranteed residual value provided by the lease contracts or otherwise
no value.
e. Intangible fixed assets (except for leased assets)—Amortization of
intangible fixed assets (except for leased assets) is mainly computed by
the straight-line method. The cost of computer software obtained forinternal use is amortized principally using the straight-line method overthe estimated useful lives of mainly 5 years.
f. Leased assets—Leased assets other than those under finance leasetransactions that are deemed to transfer ownership of leased property
to the lessee are depreciated by the straight-line method over thelease term. Residual value of those leased assets is zero, unless any
guaranteed amount is prescribed in the lease agreement.
g. Long-Lived Assets—The Group reviews its long-lived assets for
impairment whenever events or changes in circumstances indicate thecarrying amount of an asset or asset group may not be recoverable. An
impairment loss is recognized if the carrying amount of an asset or asset
group exceeds the sum of the undiscounted future cash flows expected
to result from the continued use and eventual disposition of the asset
or asset group. The impairment loss would be measured as the amountby which the carrying amount of the asset exceeds its recoverable
amount, which is the higher of the discounted cash flows from thecontinued use and eventual disposition of the asset or the net selling
price at disposition.
h. Allowance for Loan Losses—The consolidated banking subsidiary
has provided an allowance for loan losses which is determined basedon management’s judgment and assessment of future losses based on
their self-assessment systems. These systems reflect past experience ofcredit losses; possible credit losses; business and economic conditions;the character, quality, and performance of the portfolio; value ofcollateral or guarantees; and other pertinent indicators.

The consolidated banking subsidiary has implemented aself-assessment system to determine its asset quality. The quality of allloans is assessed by the branches and the credit supervisory division
with a subsequent audit by the asset review and Internal Audit divisionin accordance with the consolidated banking subsidiary’s policy andguidelines for the self-assessment of asset quality.
The consolidated banking subsidiary has established a credit rating
system under which its customers are classified into five categories.
The credit rating system is used in the self-assessment of asset
quality. All loans are classified into five categories for self-assessment
purposes: “normal,” “in need of caution,” “possible bankruptcy,” “virtual
bankruptcy,” and “legal bankruptcy.”
For claims on borrowers that have entered into bankruptcy,
special liquidation proceedings, or similar legal proceedings (“legal
bankruptcy”), or borrowers that are not legally or formally insolvent, but
are regarded as substantially in a same situation (“virtual bankruptcy”),
an allowance is provided based on the amount of claims, after thewrite-offs as stated below, net of the expected amounts of recoveries
from collateral and guarantees.
For claims on borrowers that are not currently bankrupt, but arelikely to become bankrupt in the future (“possible bankruptcy”), an
allowance is provided in the amount deemed necessary based on an
overall solvency assessment of the claims, net of the expected amountof recoveries from collateral and guarantees.
The allowance for loan losses is calculated based on the actual
historical loss ratio for “normal” and “in need of caution” categories. For
claims on borrowers whose loans are classified as “restructured loans”
over a certain amount, for which future cash flows from the collectionof principal and interest are reasonably estimated, an allowance isprovided for the difference between the present value of expected
future cash flows discounted at the contracted interest rate and thecarrying value of the claims based on the discounted cash flow method.
For collateralized or guaranteed claims of borrowers who arein “virtual bankruptcy” or “legal bankruptcy,” the amount exceeding
the estimated value of collateral or guarantees has been deducted
as deemed uncollectible directly from those claims. As of March 31,
2014, and 2013, the deducted amounts were ¥11,008 million ($106,963
thousand) and ¥14,250 million, respectively.
Other consolidated subsidiaries determine allowances for loan
losses that are provided as deemed necessary to cover expected losses
based on their own experience.

(a) Under the revised accounting standard, actuarial gains and losses
and past service costs that are yet to be recognized in profit or loss
are recognized within equity (accumulated other comprehensive
income), after adjusting for tax effects, and any resulting deficit or
surplus is recognized as a liability (liability for retirement benefits) or
asset (asset for retirement benefits).
(b) The revised accounting standard does not change how to recognize
actuarial gains and losses and past service costs in profit or loss. Thoseamounts are recognized in profit or loss in the expected averageremaining service period of the employees. However, actuarial gains
and losses and past service costs that arose in the current period
and have not yet been recognized in profit or loss are included inother comprehensive income and actuarial gains and losses and past
service costs that were recognized in other comprehensive income
in prior periods and then recognized in profit or loss in the current
period shall be treated as reclassification adjustments (see Note 13).
(c) The revised accounting standard also made certain amendments
relating to the method of attributing expected benefit to periods
and relating to the discount rate and expected future salary
increases.
This accounting standard and the guidance for (a) and (b) above
are effective for the end of annual periods beginning on or after April 1,
2013, and for (c) above are effective for the beginning of annual periods
beginning on or after April 1, 2014, or for the beginning of annual
periods beginning on or after April 1, 2015, subject to certain disclosurein March 2015, both with earlier application being permitted fromthe beginning of annual periods beginning on or after April 1, 2013.
However, no retrospective application of this accounting standard toconsolidated financial statements in prior periods is required.
The Company applied the revised accounting standard andguidance for retirement benefits for (a) and (b) above, effective March
31, 2014. As a result, a liability for retirement benefits of ¥2,779 million($27,010 thousand) and an asset for retirement benefits of ¥3,357
million ($32,626 thousand) were recorded as of March 31, 2014, andaccumulated other comprehensive income for the year ended March
31, 2014, decreased by ¥960 million ($9,329 thousand).

i. Provision for directors’ bonuses—Provision for directors’ bonuses isprovided in the amount of the estimated bonuses that are attributableto each fiscal year.

l. Provision for reimbursement of deposits—Provision for reimbursement of deposits, that were derecognized as liabilities under certain
conditions, is provided for possible losses on future claims on thehistorical reimbursement experience.
m. Provision for contingent losses—Provision for contingent losses isprovided for contingent liabilities not covered by other reserves in an
amount deemed necessary based on estimated losses in the future.

j. Employees’ retirement benefits—The Company accounts for theliability for retirement benefits based on the projected benefit
obligations and plan assets at the balance sheet date. The projected
benefit obligations are attributed to periods on a straight-line basis.
Actuarial gains and losses are amortized on a straight-line basis over the
average remaining service period. Past service costs are amortized on astraight-line basis over the average remaining service period.
In May 2012, the Accounting Standards Board of Japan (“ASBJ”)
issued ASBJ Statement No. 26, “Accounting Standard for Retirement
Benefits” and ASBJ Guidance No. 25, “Guidance on Accounting Standard
for Retirement Benefits,” which replaced the accounting standard for
retirement benefits that had been issued by the Business Accounting
Council in 1998 with an effective date of April 1, 2000, and the otherrelated practical guidance, and were followed by partial amendmentsfrom time to time through 2009.

k. Provision for directors’ retirement benefits—Provision for directors’
retirement benefits, which is provided for payments of retirement
benefits to directors, is recorded in the amount deemed accrued at the
fiscal year end date based on the estimated amount of benefits.

n. Provision for point card certificates—Provision for point card certificates, which is provided for the future use of points granted to customers under credit card points programs, is calculated by converting theoutstanding points into a monetary amount, and rationally estimating
and recognizing the amount that will be redeemed in the future.
o. Provision for loss on disaster—Provision for loss on disaster isprovided for the estimated payments for repair of damaged fixed assets
by the Great East Japan Earthquake.

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201427

p. Asset retirement obligation—In March 2008, the ASBJ published theaccounting standard for asset retirement obligations, ASBJ Statement
No. 18 “Accounting Standard for Asset Retirement Obligations” andASBJ Guidance No. 21 “Guidance on Accounting Standard for Asset
Retirement Obligations.” Under this accounting standard, an asset
retirement obligation is defined as a legal obligation imposed either
by law or contract that results from the acquisition, construction,
development and the normal operation of a tangible fixed asset and isassociated with the retirement of such tangible fixed asset. The asset
retirement obligation is recognized as the sum of the discounted cash
flows required for the future asset retirement and is recorded in the
period in which the obligation is incurred if a reasonable estimate canbe made. If a reasonable estimate of the asset retirement obligation
cannot be made in the period the asset retirement obligation isincurred, the liability should be recognized when a reasonable estimateof the asset retirement obligation can be made. Upon initial recognitionof a liability for an asset retirement obligation, an asset retirement cost is
capitalized by increasing the carrying amount of the related fixed asset
by the amount of the liability. The asset retirement cost is subsequently
allocated to expense through depreciation over the remaining usefullife of the asset. Over time, the liability is accreted to its present value
each period. Any subsequent revisions to the timing or the amount of
the original estimate of undiscounted cash flows are reflected as an
adjustment to the carrying amount of the liability and the capitalized
amount of the related asset retirement cost.
q. Stock Options—In December 2005, the ASBJ issued ASBJ Statement
No. 8, “Accounting Standard for Stock Options” and related guidance.
The standard and guidance are applicable to stock options newly
granted on and after May 1, 2006. This standard requires companies
to measure cost of employee stock options is based on the fair value
at the date of grant and recognized compensation expense over thevesting period as consideration for receiving goods or services. The
standard also requires companies to account for stock options granted
to nonemployees based on the fair value of either the stock option
or the goods or services received. In the balance sheet, stock options
are presented as stock acquisition rights as a separate component ofequity until exercised. The standard covers equity-settled, share-based
payment transactions, but does not cover cash-settled, share-based
payment transactions. In addition, the standard allows unlistedcompanies to measure options at their intrinsic value, if they cannot
reliably estimate fair value.
r. Income Taxes—The provision for income taxes is computed based on
the pretax income included in the consolidated statements of income.
The asset and liability approach is used to recognize deferred tax assets
and liabilities for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases of assets
and liabilities. Deferred taxes are measured by applying currently
enacted tax laws to the temporary differences. A valuation allowance
is provided for any portion of the deferred tax assets if it is consideredmore likely than not that they will not be realized.
s. Translation of foreign currencies—Assets and liabilities denominatedin foreign currencies are translated at exchange rates prevailing as of
the balance sheet date.

28

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

t. Derivatives and Hedging Activities—Derivative financial instruments
are classified and accounted for as follows: (a) all derivatives, except
those entered into for hedging purposes, are recognized as either assets
or liabilities and measured at fair value with gains or losses on derivativetransactions recognized in the consolidated statements of income or(b) for derivatives used for hedging purposes, if the derivatives qualify
for hedge accounting because of high correlation and effectivenessbetween the hedging instruments and the hedged items, gains orlosses on the derivatives are deferred until maturity of the hedgedtransactions (deferral hedge accounting).
The consolidated banking subsidiary applies deferral hedge
accounting based on the rules of the Japanese Institute of Certified
Public Accountants (“JICPA”) Industry Audit Committee Report No. 24
for interest rate derivatives to manage interest rate risk from various
financial assets and liabilities as a whole. Under these rules, theeffectiveness of a fair value hedge is assessed by an identified group ofhedge deposits, loans, and similar instruments, and by a corresponding
group of hedging instruments, such as interest rate swaps in the same
maturity category. Also, under these rules, the effectiveness of cash flow
hedges is assessed based on the correlation between a base interest
rate index of the hedged cash flow and that of the hedging instrument.
The consolidated banking subsidiary applies deferral hedge
accounting based on the rules of the JICPA Industry Audit Committee
Report No. 25 to currency swaps and funding swaps used for the purpose of currency exchange. Under the deferral hedge accounting under
the Report No. 25, hedged items are identified by grouping the foreign
currency-denominated financial assets and liabilities by currencies anddesignating derivative transactions, such as currency swap transactions
and foreign exchange swaps, as hedging instruments. Effectiveness ofcurrency swap transactions and foreign exchange swap transactions
is reviewed by comparing the total foreign currency position of thehedged items and the hedging instrument by currency.
u. Cash and Cash Equivalents—For the purpose of the consolidated
statements of cash flows, cash and cash equivalents represent cash anddue from the Bank of Japan.
v. Consumption Taxes—National and local consumption taxes are
excluded from the transaction amounts.
w. Per-Share Information—Basic net income per share of common
stocks is computed by dividing net income attributable to commonshareholders by the weighted-average number of shares of common
stock outstanding for the period, retroactively adjusted for stock splits.
Diluted net income per share reflects the potential dilution that
could occur if securities were exercised or converted into common
stock. Diluted net income per share of common stock assumes full
exercise of outstanding warrants.
Cash dividends per share presented in the accompanying consolidated statements of income are dividends applicable to the respective
years, including dividends to be paid after the end of the year.

x. New Accounting Pronouncements
Accounting Standard for Retirement Benefits—On May 17, 2012,
the ASBJ issued ASBJ Statement No. 26, “Accounting Standard
for Retirement Benefits” and ASBJ Guidance No. 25, “Guidance on
Accounting Standard for Retirement Benefits,” which replaced the
Accounting Standard for Retirement Benefits that had been issued by
the Business Accounting Council in 1998 with an effective date of April
1, 2000, and the other related practical guidance, and were followed bypartial amendments from time to time through 2009.
Major changes are as follows:(a) Treatment in the balance sheet
Under the current requirements, actuarial gains and losses and past
service costs that are yet to be recognized in profit or loss are notrecognized in the balance sheet, and the difference between retirement
benefit obligations and plan assets (hereinafter, “deficit or surplus”),
adjusted by such unrecognized amounts, is recognized as a liability orasset.
Under the revised accounting standard, actuarial gains and losses
and past service costs that are yet to be recognized in profit or loss
shall be recognized within equity (accumulated other comprehensive
income), after adjusting for tax effects, and any resulting deficit or
surplus shall be recognized as a liability (liability for retirement benefits)
or asset (asset for retirement benefits).
(b) Treatment in the statement of income and the statement of comprehensive income
The revised accounting standard does not change how to recognize
actuarial gains and losses and past service costs in profit or loss. Thoseamounts would be recognized in profit or loss over a certain period
no longer than the expected average remaining service period of theemployees. However, actuarial gains and losses and past service costs
that arose in the current period and have not yet been recognized in
profit or loss shall be included in other comprehensive income andactuarial gains and losses and past service costs that were recognizedin other comprehensive income in prior periods and then recognizedin profit or loss in the current period shall be treated as reclassification
adjustments.
(c) Amendments relating to the method of attributing expected benefit
to periods and relating to the discount rate and expected future salary
increases
The revised accounting standard also made certain amendments
relating to the method of attributing expected benefit to periods andrelating to the discount rate and expected future salary increases.
This accounting standard and the guidance for (a) and (b) above
are effective for the end of annual periods beginning on or after April 1,
2013, and for (c) above are effective for the beginning of annual periods
beginning on or after April 1, 2014, or for the beginning of annual
periods beginning on or after April 1, 2015, subject to certain disclosurein March 2015, both with earlier application being permitted fromthe beginning of annual periods beginning on or after April 1, 2013.
However, no retrospective application of this accounting standard toconsolidated financial statements in prior periods is required.
The Company applied the revised accounting standard for (a) and(b) above effective March 31, 2014, and expects to apply (c) above from
April 1, 2014, and is in the process of measuring the effects of applying
the revised accounting standard for (c) above in future applicable
periods.

Accounting Standards for Business Combinations and Consolidated
Financial Statements—On September 13, 2013, the ASBJ issued
revised ASBJ Statement No. 21, “Accounting Standard for Business
Combinations,” revised ASBJ Guidance No. 10, “Guidance on AccountingStandards for Business Combinations and Business Divestitures,” andrevised ASBJ Statement No. 22, “Accounting Standard for Consolidated
Financial Statements.”
Major accounting changes are as follows:
Transactions with noncontrolling interest
A parent’s ownership interest in a subsidiary might change if the parent
purchases or sells ownership interests in its subsidiary. The carrying
amount of minority interest is adjusted to reflect the change in theparent’s ownership interest in its subsidiary while the parent retains
its controlling interest in its subsidiary. Under the current accounting
standard, any difference between the fair value of the consideration
received or paid and the amount by which the minority interest is
adjusted is accounted for as an adjustment of goodwill or as profit
or loss in the consolidated statement of income. Under the revised
accounting standard, such difference shall be accounted for as capitalsurplus as long as the parent retains control over its subsidiary.
Presentation of the consolidated balance sheet
In the consolidated balance sheet, “minority interest” under the current
accounting standard will be changed to “noncontrolling interest” under
the revised accounting standard.
Presentation of the consolidated statement of income
In the consolidated statement of income, “income before minority
interest” under the current accounting standard will be changed to“net income” under the revised accounting standard, and “net income”
under the current accounting standard will be changed to “net income
attributable to owners of the parent” under the revised accounting
standard.
Provisional accounting treatments for a business combination
If the initial accounting for a business combination is incomplete by
the end of the reporting period in which the business combination
occurs, an acquirer shall report in its financial statements provisioned
amounts for the items for which the accounting is incomplete. Under
the current accounting standard guidance, the impact of adjustments
to provisional amounts recorded in a business combination on
profit or loss is recognized as profit or loss in the year in which themeasurement is completed. Under the revised accounting standard
guidance, during the measurement period, which shall not exceed one
year from the acquisition, the acquirer shall retrospectively adjust theprovisional amounts recognized at the acquisition date to reflect new
information obtained about facts and circumstances that existed as of
the acquisition date and that would have affected the measurementof the amounts recognized as of that date. Such adjustments shall berecognized as if the accounting for the business combination had been
completed at the acquisition date.

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201429

Acquisition-related costs
Acquisition-related costs are costs, such as advisory fees or professionalfees, which an acquirer incurs to effect a business combination. Under
the current accounting standard, the acquirer accounts for acquisitionrelated costs by including them in the acquisition costs of the investment. Under the revised accounting standard, acquisition-related costs
shall be accounted for as expenses in the periods in which the costs are
incurred.
The above accounting standards and guidance for “transactions
with noncontrolling interest,” “acquisition-related costs” and “presentation changes in the consolidated financial statements” are effective
for the beginning of annual periods beginning on or after April 1, 2015.
Earlier application is permitted from the beginning of annual periods
beginning on or after April 1, 2014, except for the presentation changes
in the consolidated financial statements. In case of earlier application, allaccounting standards and guidance above, except for the presentation
changes, should be applied simultaneously. Either retrospective or prospective application of the revised accounting standards and guidancefor “transactions with noncontrolling interest” and “acquisition-related
costs” is permitted. In retrospective application of the revised standards
and guidance for “transactions with noncontrolling interest” and“acquisition-related costs,” accumulated effects of retrospective
adjustments for all “transactions with noncontrolling interest” and“acquisition-related costs” which occurred in the past shall be reflected
as adjustments to the beginning balance of capital surplus and retained
earnings for the year of the first-time application.
In prospective application, the new standards and guidance for“transactions with noncontrolling interest” and “acquisition-related
costs” shall be applied prospectively from the beginning of the year of
the first-time application. The changes in presentation shall be applied
to all periods presented in financial statements containing the first-time
application of the revised standards and guidance.
The revised standards and guidance for “provisional accounting
treatments for a business combination” is effective for a business combination which will occur on or after the beginning of annual periods
beginning on or after April 1, 2015. Earlier application is permitted fora business combination which will occur on or after the beginning ofannual periods beginning on or after April 1, 2014.
The Group expects to apply the revised accounting standards
and guidance from the beginning of the annual period beginning on
April 1, 2014, and is in the process of measuring the effects of applying
the revised accounting standards and guidance in future applicable
periods.

30

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

3. CASH AND CASH EQUIVALENTS
The reconciliation of “Cash and cash equivalents” in the consolidated
statement of cash flows and “Cash and due from banks” in the consolidated balance sheet as of March 31, 2014 and 2013 was as follows:
Thousands of
U.S. Dollars
2014

Millions of Yen
2014
2013

Cash and due from banks.......................... ¥344,369 ¥197,870
Interest-bearing deposits included
in due from banks (other than due
from the Bank of Japan)...........................
(2,001)(42,809)
Cash and cash equivalents........................ ¥342,368 ¥155,060$3,345,992(19,446)$3,326,546

4. TRADING ACCOUNT SECURITIES AND SECURITIESSecurities as of March 31, 2014 and 2013 consisted of the following:Thousands of
U.S. Dollars
2014

Millions of Yen
2014
2013

Japanese national government bonds.... ¥  439,400 ¥  439,698
Japanese local government bonds.......
257,005
311,644
Japanese corporate bonds........................
269,572
286,841
Japanese corporate stocks.........................
42,94951,059Other securities...............................................
167,542
97,666
Total..................................................................... ¥1,176,469 ¥1,186,910$ 4,269,340
2,497,139
2,619,241
417,308
1,627,888$11,430,916

Net unrealized (losses) gains on trading account securities were¥(8) million ($(82) thousand) and ¥24 million for the years ended March2014 and 2013, respectively.
The cost and aggregate fair value of available-for-sale securities
and held-to-maturity securities as of March 31, 2014 and 2013 were as
follows:
March 31, 2014

Cost

Millions of Yen
Unrealized Unrealized
gains
lossesSecurities classified as:
Available-for-sale:¥1,047,380 ¥31,163
Equity securities.....................
21,949 20,585
Debt securities:
876,724
7,015
Japanese national
government bonds...... 364,407
2,428Japanese local
government bonds...... 253,723
3,362Japanese corporate
bonds................................. 258,593
1,224
Others:148,706
3,563
Foreign bonds...................
98,680401
Held-to-maturity:
97,695
7,942
Japanese national
government bonds............
72,708
7,395Japanese corporate
bonds........................................
9,987
337
Others:14,999209
Foreign bonds...................
14,999209

Fair value¥1,677
1,067
457¥1,076,866
41,466883,282144

366,69180

257,005

232
151
144
—

259,585
152,118
98,937
105,638—

80,104———

10,324
15,20915,209

March 31, 2013

Cost

Securities classified as:
Available-for-sale:¥1,053,947
Equity securities.....................
31,083
Debt securities:
944,031
Japanese national
government bonds...... 361,689
Japanese local
government bonds...... 306,595
Japanese corporate
bonds................................. 275,746
Others:78,832Foreign bonds...................
61,138
Held-to-maturity:
99,646
Japanese national
government bonds............
72,668Japanese corporate
bonds........................................
9,977
Others:16,999Foreign bonds...................
16,999March 31, 2014

Cost

Millions of Yen
Unrealized Unrealized
gains
lossesFair value¥32,607
19,354
11,760¥1,240761
253¥1,085,314
49,676
955,538

5,340—

367,0295,056

7

311,644

1,363
1,492
192
7,862

246
225
89
3

276,864
80,09961,242
107,504

7,132

1

79,799

504
226
226

—
1
1

10,481
17,224
17,224

Information on available-for-sale securities, which were sold during
the years ended March 31, 2014 and 2013, were as follows:
March 31, 2014

Available-for-sale:
Equity securities.................................................... ¥ 20,445 ¥11,325
Debt securities:...................................................... 163,456
2,706Japanese national government bonds.... 162,382
2,699Japanese local government bonds........
——
Japanese corporate bonds.........................
1,073
6
Other securities......................................................
1,826—
Total.................................................................................. ¥185,728 ¥14,032

March 31, 2013

Thousands of U.S. Dollars
Unrealized Unrealized
gains
lossesSecurities classified as:
Available-for-sale:$10,176,650 $302,795
Equity securities.....................
213,264 200,011
Debt securities:
8,518,509
68,163
Japanese national
government bonds...... 3,540,688
23,595
Japanese local
government bonds...... 2,465,251
32,675
Japanese corporate
bonds................................. 2,512,571
11,894
Others:1,444,877
34,621
Foreign bonds...................
958,8073,903
Held-to-maturity:
949,241
77,170Japanese national
government bonds............
706,460
71,853
Japanese corporate
bonds........................................
97,037
3,280
Others:145,7442,037
Foreign bonds...................
145,744
2,037

Fair value$16,299
10,3754,450$10,463,146
402,900
8,582,223

1,403

3,562,880

786

2,497,139

2,261
1,475
1,402
—

2,522,204
1,478,023
961,308
1,026,411—

778,313———100,317
147,781
147,781Millions of Yen
Realized
Realized
Proceeds
gains
lossesMillions of Yen
Realized
Realized
Proceeds
gains
lossesAvailable-for-sale:
Equity securities.................................................... ¥  2,926
Debt securities:...................................................... 197,954
Japanese national government bonds.... 109,584
Japanese local government bonds........ 31,480
Japanese corporate bonds......................... 56,889
Other securities......................................................
3,469
Total.................................................................................. ¥204,350

March 31, 2014¥   54
1,326
1,324
—
1
91
¥1,472¥  364
5,625
2,603
1,121
1,900
—
¥5,989¥  679————809¥1,489Thousands of U.S. Dollars
Realized
Realized
Proceeds
gains
lossesAvailable-for-sale:
Equity securities.................................................... $198,654 $110,045
Debt securities:...................................................... 1,588,188
26,295
Japanese national government bonds.... 1,577,755
26,230Japanese local government bonds........
——
Japanese corporate bonds.........................
10,43365
Other securities......................................................
17,747—
Total.................................................................................. $1,804,588 $136,340$   531
12,887
12,871—
16
886$14,304

Marketable available-for-sale securities, whose fair value significantly declined in comparison with the acquisition cost and whose fairvalue is not considered likely to recover to their acquisition cost, arewritten down and recognized as impairment losses.
The criteria for determining whether the fair value is “significantly
declined” are defined as follows:(a) Securities whose fair value has declined by 50% or more of theacquisition cost are deemed to be impaired.
(b) Securities whose fair value has declined by 30% or more but lessthan 50% of the acquisition cost and their fair value is deemed notrecoverable by individual assessment.
The impairment losses on marketable available-for-sale securities
for the years ended March 31, 2014 and 2013, were nil and ¥111 million,
respectively.
As of March 31, 2014 and 2013, securities included equity investments in unconsolidated subsidiaries and associated companies of ¥9million ($90 thousand) and nil, respectively, and capital subscriptions of¥421 million ($4,100 thousand) and ¥567 million, respectively.

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201431

5. UNREALIZED GAINS ON AVAILABLE-FOR-SALE SECURITIES
Unrealized gains on available-for-sale securities as of March 31, 2014
and 2013 consisted of the following:
Millions of Yen
2014
2013

Unrealized gains:............................................ ¥29,486
Available-for-sale securities................ 29,486
Money held in trust except
for trading and held-to-maturity
purpose......................................................
—
Deferred tax liabilities:.................................
9,255
Unrealized gains on available-for-salesecurities before adjustments
by ownership share.................................... 20,230
Minority interests...........................................
—
Company’s ownership sharein unrealized gains (losses)
on available-for-sale securities heldby affiliates accounted for using
the equity method......................................
—
Unrealized gains on available-for-salesecurities.......................................................... ¥20,230

Thousands of
U.S. Dollars
2014¥31,366
31,366$286,496
286,496—
9,412—
89,932

21,954—

196,564———¥21,954$196,564

6. LOANS AND BILLS DISCOUNTED
The following loans were included in loans and bills discounted as ofMarch 31, 2014 and 2013:
Millions of Yen
2014
2013

Loans to borrowers
in legal bankruptcy..................................... ¥  3,165
Past due loans.................................................
77,250Loans past due
for three months or more........................
2
Restructured loans........................................
34,741
Total..................................................................... ¥115,159

Thousands of
U.S. Dollars
2014¥  3,386
88,194$   30,758
750,5865
31,745¥123,33120
337,561$1,118,925

The amounts above are stated before the deduction of theallowance for loan losses.
“Loans to borrowers in legal bankruptcy” are nonaccrual loans,which are highly probable to become unrecoverable. Specific conditions for inclusion in this category are as follows:(i) Borrowers have made application for procedures under the
Corporate Reorganization Act, Civil Rehabilitation Act, Bankruptcy Act,liquidation under the Companies Act of Japan, or liquidation underother legal provisions.
(ii) Clearance of promissory notes or bills issued by the borrower issuspended.
“Past due loans” are loans on which accrued interest income is notrecognized, excluding “loans to borrowers in legal bankruptcy” andloans on which interest payments are deferred in order to support theborrowers’ recovery from financial difficulties.
“Loans past due for three months or more” include accruing loans
for which principal or interest is past due three months or more.
“Restructured loans” are loans to borrowers in financial difficulty towhom the Group has provided financial support through modificationof the lending terms to be more favorable to the borrower, including
reduction of interest rates, suspension of repayment of principal andinterest, and debt forgiveness.

32

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

Contracts of overdraft facilities and loan commitment limits arecontracts under which the consolidated banking subsidiary and certain
consolidated subsidiaries lend to customers up to the prescribed limits
in response to customer applications for loans as long as there is no
violation of any condition in the contracts. As of March 31, 2014 and2013, the amounts of unused commitments were ¥1,183,354 million($11,497,813 thousand) and ¥1,120,969 million, respectively. As of
March 31, 2014 and 2013, the amounts of unused commitments whose
remaining contract terms were within one year were ¥1,159,022 million($11,261,391 thousand) and ¥1,098,775 million, respectively.
As many of these commitments expire without being drawn
down, the unused amount does not necessarily represent a future cash
requirement. Most of these contracts have conditions whereby the consolidated banking subsidiary and certain consolidated subsidiaries canrefuse customer applications for loans or decrease the contract limits
for certain reason (e.g., changes in financial situation, and deteriorationin customers’ creditworthiness). At the inception of the contracts, theconsolidated banking subsidiary and certain consolidated subsidiaries
obtain real estate, securities, or other assets as collateral if considered
to be necessary. Subsequently, the consolidated banking subsidiaryand certain consolidated subsidiaries perform periodic reviews of
the customers’ business results based on the internal rules and takenecessary measures to reconsider conditions in the contracts and/or
require additional collateral and guarantees.
Discounting bills are treated as secured lending transactions. As of
March 31, 2014 and 2013, consolidated banking subsidiary has the rightto sell or repledge bills discounted and foreign exchange bills bought
and their total face value was ¥27,692 million ($269,070 thousand) and¥29,117 million, respectively.

7. TANGIBLE FIXED ASSETS
Tangible fixed assets as of March 31, 2014 and 2013 consisted of thefollowing:
Millions of Yen
2014
2013

Buildings............................................................ ¥ 7,294
Land..................................................................... 12,467
Leased assets...................................................
12
Construction in progress............................
238
Other...................................................................
3,366
Total..................................................................... ¥23,378¥ 7,240
12,53619
54
3,929¥23,780

Thousands of
U.S. Dollars
2014$ 70,871
121,138
122
2,314
32,709$227,153

The accumulated depreciation of tangible fixed assets as of March
31, 2014 and 2013, amounted to ¥38,865 million ($377,623 thousand)and ¥38,569 million, respectively.
Under certain conditions, such as exchanges of fixed assets ofsimilar kinds and sales and purchases resulting from expropriation,
Japanese tax laws permit companies to defer the profit arising fromsuch transactions by reducing the cost of the assets acquired or byproviding a special reserve in the equity section. As of March 31, 2014
and 2013, such deferred profit amounted to ¥2,771 million ($26,926
thousand) and ¥2,771 million, respectively.

8. INTANGIBLE FIXED ASSETS

11. BORROWED MONEY

Intangible fixed assets as of March 31, 2014 and 2013 consisted of thefollowing:

As of March 31, 2014 and 2013, the weighted-average annualinterest rates applicable to borrowed money were 1.06% and 2.76%,
respectively.
Borrowed money includes borrowings from the Bank of Japanand other financial institutions. In addition, borrowed money included
subordinated borrowings totaling ¥80,000 million ($777,303 thousand)and ¥80,000 million as of March 31, 2014 and 2013, respectively.

Millions of Yen
2014
2013

Software............................................................. ¥ 4,219
Goodwill............................................................. 88,384
Leased assets...................................................
2
Other...................................................................
535
Total..................................................................... ¥93,141¥  5,465
94,5875536¥100,594

Thousands of
U.S. Dollars
2014$ 40,994
858,77024
5,201$904,989

The amortization expense for goodwill was included in general andadministrative expenses for the years ended March 31, 2014 and 2013,
amounted to ¥6,202 million ($60,265 thousand) and ¥6,202 million.

9. CUSTOMERS’ LIABILITIES FOR ACCEPTANCES AND
GUARANTEESAll contingent liabilities arising from acceptances and guarantees
are reflected in acceptances and guarantees. As a contra account,customers’ liabilities for acceptances and guarantees are presented asassets, representing the consolidated banking subsidiary’s and certain
consolidated subsidiaries’ rights of indemnity from the applicants.
Guarantee obligations for private placement bonds included in“Securities” (provided in accordance with the Article 2-3 of the “Financial
Instruments and Exchange Act”) as of March 2014 and 2013 were¥41,628 million ($404,471 thousand) and ¥33,346 million, respectively.

10. ASSETS PLEDGED AS COLLATERAL
Assets pledged as collateral and the related liabilities as of March 31,
2014 and 2013 were as follows:
Millions of Yen
2014
2013

Assets pledged as collateral:
Cash and due from banks.................... ¥      2Securities..................................................... 266,669
Loans and bills discounted..................
41,150
Relevant liabilities to above assets:
Deposits....................................................... ¥118,551
Payables under securities
lending transactions............................
5,965
Borrowed money..................................... 100,570

Thousands of
U.S. Dollars
2014¥      2390,104
56,200$       262,591,037
399,825¥110,570$1,151,875

71,951
41,60057,966
977,167

12. OTHER LIABILITIESOther liabilities included asset retirement obligations of ¥534 million($5,195 thousand) and ¥527 million as of March 31, 2014 and 2013,
respectively.
(a) Overview of asset retirement obligations
Asset retirement obligations which were recognized for restoring leased
buildings, such as branch premises, to their original state, based on thereal estate lease contracts.
(b) Calculation of asset retirement obligations
Asset retirement obligations are calculated based on the estimatedavailable period of 19 to 39 years using the discount rates from 1.6% to
2.3%.
Millions of Yen
2014
2013

Balance at beginning of year....................
Additional provisions associatedwith the acquisition of
tangible fixed assets...................................
Reconciliation associatedwith passage of time..................................
Reduction associated with meeting
asset retirement obligations...................
Balance at end of year.................................

Thousands of
U.S. Dollars
2014

¥527

¥493

$5,127

7

33

70

4

4

48

(5)
¥534

(4)
¥527

(51)
$5,195Additionally, securities amounting to ¥72,981 million ($709,114
thousand) and ¥81,634 million as of March 31, 2014 and 2013,
respectively, were pledged as collateral for settlements of exchange oras substitute securities for margins on futures transactions.
Moreover, other assets included security deposits amounting to¥686 million ($6,672 thousand) and ¥688 million as of March 31, 2014
and 2013, respectively.

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201433

13. LIABILITY RETIREMENT BENEFITS(d) Components of pension cost

The Company and certain consolidated subsidiaries have severance
payment plans for employees. Under most circumstances, employees
terminating their employment are entitled to retirement benefits
determined based on the rate of pay at the time of termination, yearsof services and certain other factors. Such retirement benefits are madein the form of a lump sum severance payment from the Company orfrom certain consolidated subsidiaries and annuity payments are from atrustee. Employees are entitled to larger payments if the termination isvoluntary, by retirement at the mandatory retirement age, by death, orby voluntary retirement at certain specific ages prior to the mandatory
retirement age.
Year Ended March 31, 2014(a) Change in benefit obligation
Millions of Yen
2014

Thousands of
U.S. Dollars
2014

Benefit obligation, beginning of year.............................. ¥47,041
Service cost............................................................................
1,150
Interest cost...........................................................................
533
Actuarial loss.........................................................................
1,459
Benefits paid.........................................................................
(2,855)
Other........................................................................................
52
Benefit obligation, at end of year...................................... ¥47,382$457,068
11,177
5,183
14,182(27,744)513$460,379(b) Change in plan assets
Millions of Yen
2014

Thousands of
U.S. Dollars
2014

Plan assets, beginning of year............................................. ¥44,697
Expected return on plan assets....................................
893
Actuarial gain........................................................................
1,947
Employers’ contributions................................................
2,028
Benefits paid.........................................................................
(1,642)Other........................................................................................
35
Plan assets, at end of year..................................................... ¥47,960$434,298
8,686
18,926
19,705(15,963)343$465,996(c) The reconciliation of the ending balances of benefit obligationand plan assets to liability for retirement benefits and asset for
retirement benefits
Millions of Yen
2014

Thousands of
U.S. Dollars
2014

Benefit obligation funded, at end of year...................... ¥47,382
Plan assets, at end of year..................................................... (47,960)(578)
Benefit obligation unfunded, at end of year................
—Net amount on the balance sheet.................................... ¥   (578)$460,379(465,996)(5,616)—$ (5,616)

Millions of Yen
2014

Thousands of
U.S. Dollars
2014

Liability for retirement benefits.......................................... ¥2,779
Asset for retirement benefits............................................... (3,357)
Net on balance sheet.............................................................. ¥ (578)34

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

$27,010(32,626)$ (5,616)

Service cost..................................................................................
Interest cost.................................................................................
Expected return on plan assets..........................................
Recognized actuarial loss......................................................
Amortization of prior service cost.....................................
Other retirement costs (nonactuarial-basis cost).......
Pension cost related to defined benefit pension plan...

Millions of Yen
2014

Thousands of
U.S. Dollars
2014¥1,150
533
(893)
1,055
(144)
17
¥1,717$11,177
5,183(8,686)
10,253(1,407)
169$16,690(e) Defined retirement benefit plan
Accumulated other comprehensive income on defined retirement
benefit plan (before taxes) was as follows:
Millions of Yen
2014

Thousands of
U.S. Dollars
2014

Unrecognized prior-service cost........................................ ¥ 1,303
Unrecognized actuarial loss................................................. (2,796)
Accumulated other comprehensive income
on defined retirement benefit plan............................... ¥(1,493)$ 12,664(27,176)$(14,511)(f) Classification of plan assets by financial instruments
Components of plan assets on balance sheet were as follows:
Ratios2014

Bonds............................................................................................................................
Securities.....................................................................................................................
Short-term assets.....................................................................................................
Other.............................................................................................................................
Total...............................................................................................................................

71%
21%
3%
5%
100%

* T otal plan assets include retirement benefit trust of 25% which was set up on
corporate pension plans.

(g) Assumptions
Assumptions used to determine benefit obligations are set forth asfollows:
2014

Discount rate............................................................................................................. 1.0%–1.2%
Long-run expected rate of return on plan assets......................................
2.0%
Defined Contribution Plans:
The amount of the required contribution to the defined contributionplans of the Company and certain consolidated subsidiaries was ¥291
million ($2,836 thousand).

Year Ended March 31, 2013
The liability for employees’ retirement benefits as of March 31, 2013
consisted of the following:
Millions of Yen
2013

Projected benefit obligation................................................................................. ¥(47,041)
Fair value of plan assets.......................................................................................... 44,697
Unfunded projected benefit obligation..........................................................
(2,343)
Unrecognized actuarial loss..................................................................................
4,340
Unrecognized prior service cost.........................................................................
(1,448)Net liability recognized...........................................................................................
548
Prepaid pension cost................................................................................................
1,818
Liability for employees’ retirement benefits.................................................. ¥ (1,269)
The components of retirement benefit costs for the years ended March
31, 2013 were as follows:
Millions of Yen
2013

Service cost...................................................................................................................
Interest cost..................................................................................................................
Expected return on plan assets...........................................................................
Amortization of prior service cost......................................................................
Recognized actuarial loss.......................................................................................
Other retirement costs (nonactuarial-basis cost)........................................
Periodic retirement benefit costs.......................................................................
Gain on the transfer to a defined contribution plan..................................
Net periodic retirement benefit costs..............................................................

¥1,149
875
(623)
(143)
882
228
2,368
(877)
¥1,490Assumptions used for the year ended March 31, 2013 are set forth asfollows:
2013

Discount rate............................................................................................................. 1.0%–1.2%
Expected rate of return on plan assets...........................................................
2.0%
Amortization period of prior service cost..................................................... 11 years
Recognition period of actuarial gain/loss..................................................... 7–11 years

14. EQUITY
Japanese companies are subject to the Companies Act of Japan (the“Companies Act”). The significant provisions in the Companies Act that
affect financial and accounting matters are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any time
during the fiscal year in addition to the year-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as: (1) having the Board of Directors, (2) having independent
auditors, (3) having the Board of Corporate Auditors, and (4) the term ofservice of the directors is prescribed as one year rather than two years ofnormal term by its articles of incorporation, the Board of Directors may
declare dividends (except for dividends in kind) at any time during the
fiscal year if the company has prescribed so in its articles of incorporation. The Company meets all the above criteria. The Board of Directorsof companies with board committees (an appointment committee,
compensation committee, and audit committee) can also declare
dividends (except for dividends in kind) because such companies withboard committees already, by nature, meet the above criteria under theCompanies Act, even though such companies have an audit committee
instead of the Board of Corporate Auditors. The Company is organized
as a company with board committees. The limitation is defined as theamount available for distribution to the shareholders, but the amount ofequity after dividends must be maintained at no less than ¥3 million.
The Companies Act permits companies to distribute dividends
in-kind (noncash assets) to shareholders subject to certain limitations
and additional requirements.
Semiannual interim dividends may also be paid once a year upon
resolution by the Board of Directors if the articles of incorporation of thecompany so stipulate. The Companies Act provides certain limitations
on the amounts available for dividends or the purchase of treasury
stock.
b. Increases/Decreases and Transfer of Common Stock, Reserve, andSurplus
The Companies Act requires that an amount equal to 10% of dividends
must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus)
depending on the equity account that was charged upon the paymentof such dividends until the aggregate amount of the legal reserve
and additional paid-in capital equals 25% of capital stock. Under theCompanies Act, the total amount of additional paid-in capital and legal
reserve may be reversed without limitation. The Companies Act also
provides that capital stock, legal reserve, additional paid-in capital, othercapital surplus, and retained earnings can be transferred among theaccounts under certain conditions upon resolution of the shareholders.
c. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury
stock and dispose of such treasury stock by resolution of the Board of
Directors. The amount of treasury stock purchased cannot exceed theamount available for distribution to the shareholders, which is determined by specific formula. Under the Companies Act, stock acquisitionrights are presented as a separate component of equity. The Companies
Act also provides that companies can purchase both treasury stockacquisition rights and treasury stock. Such treasury stock acquisitionrights are presented as a separate component of equity or deducted
directly from stock acquisition rights.

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201435

Capital Stock Changes during the YearThe changes in the number and class of shares issued and treasury stock for the year ended March 31, 2014 were as follows:

As of March 31, 2013

Issued stock:
Common stock..................................................................................................................................................
Preferred stock:
Class No. 1 preferred stock.........................................................................................................................
Class No. 2 preferred stock.........................................................................................................................
Total..................................................................................................................................................................
Treasury stock:
Preferred stock:
Class No. 1 preferred stock.........................................................................................................................
Class No. 2 preferred stock.........................................................................................................................
Total..................................................................................................................................................................

Shares in thousands
Changes during the year
Increase
Decrease

As of March 31, 2014

2,700

330,550*1, 2—

333,250

20
10
2,730

—
—
330,550

20*3
10*4
30

—
—
333,250

—
—
—

20*3
10*4
30

20
10
30

—
—
—

*1. On October 19, 2013, the Company made stock split by way of a free share distribution at the rate of 0.01 shares for each outstanding common stock. As a result,
267,300,000 shares were issued to shareholders of record.
*2. At the Board of Directors meeting held on November 14, 2013, and November 29, 2013, the Board of Directors approved the issuance of 55,000,000 shares for the public
placement with the date of payment to be December 18, 2013. Also the Board of Directors approved to allocate newly issued common stocks of 8,250,000 shares to athird party, with the payment date of January 17, 2014, due to overallotment of secondary offering.
*3. On May 31, 2013, the Board of Directors authorized the treasury stock repurchase program. The Company repurchased 10,000 shares of Class No. 1 preferred stock as treasury stock on September 9, 2013, and retired that stock on the same day. Further, based on the repurchase clause stipulated in the Company’s Articles of Incorporation,
the Company repurchased 10,000 shares of Class No. 1 preferred stock as treasury stock on January 17, 2014, and retired that stock on the same day.
*4. Based on a repurchase clause stipulated in the Company’s Articles of Incorporation, the Company repurchased 10,000 shares of Class No. 2 preferred stock as treasury
stock on March 31, 2014, and retired that stock on the same day.

The changes in the number and class of shares issued and treasury stock for the year ended March 31, 2013 were as follows:

As of March 31, 2012

Issued stock:
Common stock..................................................................................................................................................
Preferred stock:
Class No. 1 preferred stock.........................................................................................................................
Class No. 2 preferred stock.........................................................................................................................
Total..................................................................................................................................................................

Shares in thousands
Changes during the year
Increase
Decrease

As of March 31, 2013

2,700

—

—

2,700

20
10
2,730

—
—
—

—
—
—

20
10
2,730

Cash Dividends per Share
Cash dividends per share for the years ended March 31, 2014 and 2013, were as follows:Year ended March 31, 2014:
The following cash dividend payments were approved at the Board of Directors’ meeting held on May 10, 2013 and May 12, 2014 :Cash dividends approved at the Board of Directors’ meeting held on May 10, 2013:

Class No. 1 preferred stock.................................................................................................................................
Class No. 2 preferred stock.................................................................................................................................
Total..............................................................................................................................................................................
Cash dividends approved at the Board of Directors’ meeting held on May 10, 2013:

Class No. 1 preferred stock.................................................................................................................................
Class No. 2 preferred stock.................................................................................................................................
Total..............................................................................................................................................................................
Cash dividends approved at the Board of Directors’ meeting held on May 12, 2014:

Common stock........................................................................................................................................................
Total..............................................................................................................................................................................
Cash dividends approved at the Board of Directors’ meeting held on May 12, 2014:

Common stock........................................................................................................................................................
Total..............................................................................................................................................................................

36

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

Total amount(Millions of Yen)

Per share amount(Yen)

Dividend record date

Effective date

¥3,7801,890¥5,670¥189,000.00
189,000.00

Mar. 31, 2013
Mar. 31, 2013

Jun. 10, 2013
Jun. 10, 2013

Total amount(Thousands of U.S. Dollars)

Per share amount(U.S. Dollars)

Dividend record date

Effective date

$36,728
18,364$55,091$1,836.38
1,836.38

Mar. 31, 2013
Mar. 31, 2013

Jun. 10, 2013
Jun. 10, 2013

Total amount(Millions of Yen)

Per share amount(Yen)

Dividend record date

Effective date

¥1,333¥1,333¥4.00

Mar. 31, 2014

Jun. 5, 2014

Total amount(Thousands of U.S. Dollars)

Per share amount(U.S. Dollars)

Dividend record date

Effective date

$12,952$12,952$0.04

Mar. 31, 2014

Jun. 5, 2014

Year ended March 31, 2013:
The following cash dividends payments were approved at the Board of Directors’ meeting held on May 11, 2012:
Class No. 1 preferred stock.................................................................................................................................
Class No. 2 preferred stock.................................................................................................................................
Total..............................................................................................................................................................................

Total amount(Millions of Yen)

Per share amount(Yen)

Dividend record date

Effective date

¥3,7801,890¥5,670¥189,000.00
189,000.00

Mar. 31, 2012
Mar. 31, 2012

Jun. 8, 2012
Jun. 8, 201215. STOCK OPTIONSThe Company’s stock option plans grant options to directors and others to purchase certain shares of the Company’s common stock in the respective
exercise periods.
The stock options outstanding as of March 31, 2014, are as follows:
Stock option

Persons granted

6 directors and executive officers of the Company
2009 Stock option 10 directors and executive officers of the consolidated banking subsidiary
1,848 employees of the consolidated banking subsidiary
6 directors and executive officers of the Company
2010 Stock option 10 directors and executive officers of the consolidated banking subsidiary
1,878 employees of the consolidated banking subsidiary

Number of options
granted (Shares)*1

Date of grant

Exercise
price2,684,900

March 2, 2009

¥550

From March 1, 2011,
to December 31, 2018

2,698,700

January 4, 2010

550

From January 1, 2012,
to December 31, 2018

Exercise period*2*1. On October 19, 2013, the Company made a stock split by way of a free share distribution at the rate of 0.01 shares for each outstanding common stock. All share amountsof options granted in above table have been adjusted to reflect the stock split.
*2. The stock option agreement stipulates that stock options cannot be exercised until six months after the stock has been listed.

The stock option activity is as follows:2009 Stock option

2010 Stock option

For the year ended March 31, 2014
Nonvested (shares):
March 31, 2013 — outstanding
GrantedCanceled
VestedMarch 31, 2014 — outstanding

2,653,800—
1,200—
2,652,600

2,667,000—
1,100—
2,665,900

Vested (shares):
March 31, 2013 — outstanding
VestedExercised
Canceled
March 31, 2014 — outstanding

—
—
—
—
—

—
—
—
—
—

The Assumptions Used to Measure Fair Value of Stock Option
As the Company was an unlisted company when stock option rights were granted, they were measured at their intrinsic value because the fair value ofstock option cannot be reliably estimated. The Company does not recognize relevant expenses since their fair value on the date of grant was zero. The
amount of their intrinsic value as of March 31, 2014 and 2013, were nil.

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201437

16. PER COMMON SHARE INFORMATION

Total equity per share is calculated based on the following:

Reconciliation of the differences between basic and diluted net income
per share (“EPS”) for the years ended March 31, 2014 and 2013, was asfollows:
Yen
2013

U.S. Dollars
2014¥735.82

$7.03

2014

Total equity per share.................................. ¥723.58

Note: As noted in Note 2, the Company has applied ASBJ Statement No. 26,“Accounting Standard for Retirement Benefits” and ASBJ Guidance No. 25,“Guidance on Accounting Standard for Retirement Benefits,” effective March
31, 2014 and followed the transitional treatment prescribed in Paragraph 37of the Accounting Standard. As a result, total equity per share as of March
31, 2014 decreased by ¥2.88 ($0.02).
Millions ofYen

Thousands ofshares
Weightedaverage
shares*1
Net income

Yen

U.S. Dollars
EPS

Millions of Yen
2014
2013

Total equity....................................................... ¥241,135
Deductions from total equity:
Preferred shares........................................
—
Preferred dividends.................................
—
Total...............................................................
—
Total equity attributable
to common shares...................................... ¥241,135

287,343—¥69.85
—

$0.68
—

—

—

—

Year Ended March 31, 2013
Basic EPS —Net income available
to common shareholders........... ¥ 9,735
Effect of dilutive warrants.............
—
Diluted EPS —Net income
for computation*3..........................
—

270,000—¥36.05———$2,342,940

75,0005,670
80,670———¥198,673$2,342,940

Number of shares in thousands
2014
2013

Number of common shares usedin computing total equity per shareat the year end...........................................................................

333,250

Millions of Yen
2014
2013

Net income....................................................... ¥24,314
Amount not attributable
to common shareholders:
Redemption of preferred stock.........
(4,240)Preferred dividends.................................
—Net income attributable
to common shares...................................... ¥20,073

270,000

Thousands of
U.S. Dollars
2014¥15,405$236,248—(5,670)(41,205)—¥ 9,735$195,043

17. OTHER INCOME
Other income for the years ended March 31, 2014 and 2013 consistedof the following:
Millions of Yen
2014
2013

Gain on sales of stock andother securities............................................. ¥11,325
Gain on disposal of fixed assets...............
4
Recoveries of write-off claims..................
1,631
Other...................................................................
899
Total..................................................................... ¥13,862¥  364
222
1,358
2,070
¥4,016

Thousands of
U.S. Dollars
2014$110,045
46
15,856
8,744$134,691

18. OTHER EXPENSES
Other expenses for the years ended March 31, 2014 and 2013 consistedof the following:

Write-off amount of loans..........................
Loss on sales of stocks andother securities.............................................
Loss on devaluation of stocks andother securities.............................................
Loss on sales of loans...................................
Loss on disposal of fixed assets...............
Impairment losses.........................................
Other...................................................................
Total.....................................................................

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

¥279,343

Net income per share for the years ended March 31, 2014 and 2013 is
calculated based on the following:

Year Ended March 31, 2014
Basic EPS —Net income available
to common shareholders........... ¥20,073
Effect of dilutive warrants.............
—
Diluted EPS —Net income
for computation*2..........................
—*1. On October 19, 2013, the Company split its common stock at a ratio of 100
shares to one common share. As a result, fully diluted net income per share,
basic EPS and diluted EPS has been calculated assuming that the stock split
was made at the beginning of the year-ended March 31, 2013.
*2. With regard to diluted EPS in the year ended March 31, 2014, since theCompany started to list its stock on Tokyo Stock Exchange on December 19,
2013, the average share price during the period from the date of listing until
the year ended March 31, 2014, has been calculated as though it was theaverage share price for the fiscal year. However, since the average share priceduring the fiscal year did not exceed the exercise price and the shares did not
dilute, diluted EPS is not shown because net income available to commonshareholders does not decrease as a result of dilution.
*3. Diluted EPS in the year ended March 31, 2013, is not shown because theCompany’s stock was unlisted and so the average share price cannot be
determined, even though dilutive common shares exist.

38

Thousands of
U.S. Dollars
2014

Millions of Yen
2014
2013

Thousands of
U.S. Dollars
2014¥1,999¥2,940$19,430

145

1,489

1,417

0
612
39
71
1,098
¥3,968

113
302
276
177
643
¥5,943

10
5,950
386
692
10,675$38,55919. INCOME TAXES

20. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURESThe Group is subject to Japanese national and local income taxes,
which, in the aggregate, resulted in a normal effective statutory tax rateof approximately 37.8% for the years ended March 31, 2014 and 2013.
The tax effects of significant temporary differences and loss carryforwards, which result in deferred tax assets and liabilities as of March
31, 2014 and 2013, were as follows:(1) Group Policies for Financial Instruments
The Group provides various financial services centering on banking
business. The Company is a bank-holding company and financed bysubordinate debts to acquire shares of the consolidated banking subsidiary, the Ashikaga Bank Co., Ltd. As the central business operation of
the Group, the consolidated banking subsidiary raises funds by deposits
as its basic function as a bank; the consolidated banking subsidiary also
procures funds by call money transactions from short-term markets tomaintain an adequate degree of liquidity. The consolidated banking
subsidiary manages those funds lending to company customers andindividuals, such as mortgages and investing securities, mainly bonds,
and lending to counterparties in short-term markets.
The Group utilizes Asset Liability Management (“ALM”) to avoid
unfavorable floating interest rate fluctuations of financial assets and liabilities it holds. As a part of ALM, the Group has entered into derivativetransactions.

Millions of Yen
2014
2013

Deferred tax assets:
Tax loss carryforwards............................ ¥ 6,542
Liability for retirement benefits.........
7,113
Allowance for loan losses..................... 16,080
Write-offs of securities........................... 14,088
Other.............................................................
5,342
Subtotal deferred tax assets......... 49,166
Less valuation allowance..................... (37,005)
Total deferred tax assets................. 12,161
Deferred tax liabilities:
Unrealized gains
on available-for-sale securities........
9,255
Property revaluationsin preparing consolidated
financial statements.............................
858
Other.............................................................
20
Total deferred tax liabilities........... 10,133
Net deferred tax assets................................ ¥ 2,027

Thousands of
U.S. Dollars
2014¥13,346
7,111
16,03916,7696,168
59,435(46,851)
12,583$ 63,570
69,114
156,243
136,884
51,908477,719(359,553)
118,166

9,412

89,932861
18
10,291¥ 2,292

8,337
195
98,463$ 19,703

A reconciliation between the normal effective statutory tax rate andthe actual effective tax rate reflected in the accompanying consolidated
statements of income for the years ended March 31, 2014 and 2013,
was as follows:
Normal effective statutory tax rate.....................................
Change in valuation allowance............................................
Dividends exempted from taxation...................................
Expire of tax loss carryforwards............................................
Effect of change in income tax rate....................................
Consolidation adjustments,
such as amortization of goodwill......................................
Adjustments, such as residential tax
on a per capita basis................................................................
Expenses that are not deductiblefor income tax purposes.......................................................
Other — net.................................................................................
Actual effective tax rate...........................................................

2014

2013

37.8%
(34.0)(20.8)
—
(1.2)

37.8%
(248.0)(31.2)
208.3
—

29.7

46.0

0.3

0.5

0.3
0.8
12.9%

1.6
1.2
16.2%

On March 31, 2014, a tax reform law was enacted in Japan thatchanged the normal effective statutory tax rate from approximately
37.8% to 35.4%, effective for years beginning on or after April 1, 2014.
As the result of this rate change, deferred tax assets in the consolidatedbalance sheet as of March 31, 2014 decreased by ¥330 million ($3,215
thousand), and increased income taxes-deferred in the consolidated
statement of income for the year then ended by ¥330 million ($3,215
thousand).

(2) Nature and Extent of Risks Arising from Financial Instruments
The Group’s financial assets are mainly loans made by the consolidatedbanking subsidiary to domestic corporations and individuals in Japan.
These loans are exposed to not only interest rate fluctuation risks but
also customers’ credit risks. Securities and investment securities such as
bonds, stocks, and investment trusts are held to their maturity dates togenerate stable interest income to promote business relationships withissuers. These securities are exposed to the issuers’ credit risks, interest
rate fluctuation risks, and market price fluctuation risks.
The Group’s main financial liabilities are deposits received by the
consolidated banking subsidiary. These deposits are exposed to interest
rate fluctuation risks and liquidity risks. Subordinated debts raised by theCompany and other borrowed money raised by the consolidated banking subsidiary are exposed to the risks that the Group may not be able
to repay them on their maturity dates if, under certain circumstances,
the Group is not able to access to a capital market.
The consolidated banking subsidiary utilizes derivative transactions
to hedge the customers’ interest and currency risks, to control theinterest rate fluctuation risks in ALM, and to treat as the alternative wayof on-balance-asset management under the appropriate risk control.
Derivatives mainly include interest-rate swaps, currency swaps, andbond futures, and are exposed to the interest rate fluctuation risks,market price fluctuation risks, foreign exchange fluctuation risks, andcredit risks.
Hedge accounting is applied to certain derivatives that address
currency rate fluctuation risks.
The consolidated banking subsidiary applies deferral hedge
accounting based on the rules of the JICPA Industry Audit Committee
Report No. 25 for currency swaps and funding swaps used for the purpose of currency exchange. Under deferral hedge accounting, hedged
items are identified by grouping the foreign currency-denominatedfinancial assets and liabilities by currencies and designating derivativetransactions, such as currency swap transactions and foreign exchange
swaps, as hedging instruments. Hedge effectiveness is reviewed bycomparing the total foreign currency position of the hedged items andhedging instrument by currency.
In addition, the Company conducts interest rate swaps whose
purpose is to offset the market fluctuations of securities held in“Available-for sale securities” and uses deferred hedges. Regarding
swaps that meet the requirements for the special treatment of interest
rate swaps, the Company continues to verify whether they meet special
requirements with “post testing.”

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201439

Derivative transactions that do not qualify for hedge accounting
are exposed to interest rate fluctuation risks, foreign exchange rate
fluctuation risks, price fluctuation risks, and credit risks.
(3) Risk Management for Financial Instruments(a) Credit risk management
The Group has implemented and operated the credit control systemthat includes credit review of each individual loan application, establishing credit limits, managing credit information, internal credit rating,securing adequate guarantees and collaterals, and handling troubledloans. The credit control management is performed by the Credit
Supervising Division I and the Credit Supervising Division II as well as ateach banking office of the consolidated banking subsidiary. In addition,
those credit information and matters are regularly reported to anddiscussed by the Credit Portfolio Meeting and the Board of Directors.
The Internal Audit Division monitors the status of credit management.
To monitor the credit risks of security issuers and counterparty risksof derivatives, the International and Treasury Administration Divisionof the consolidated banking subsidiary regularly obtains and reviews
relevant credit and fair value information.
(b) Market risk management(i) Interest risk management
The Group manages risks of interest rate fluctuations by ALM. Risk management policies and procedures are prescribed in relevant ALM rules
and manuals and any policies decided to be implemented are closely
monitored and regularly discussed in the ALM Meeting. The Company’s
Risk Management Group in Business Administration Department
maintains comprehensive information of interest rates and durations offinancials assets and liabilities, performs gap analyses and the interest
rate sensitive analyses, and reports monthly results to the ALM Meeting.
The Group utilizes derivative transactions, such as interest rate swaps, tohedge the interest rate fluctuation risks.
(ii) Currency risk management
The International and Treasury Administration Division of the consolidated banking subsidiary manages the subsidiary’s foreign exchange
positions and hedges the risks of exchange rate fluctuations by using
derivative transactions, such as funding swaps.
(iii) Price fluctuation risk management
The Group manages investment instruments, including securities, inaccordance with security investment and market risk management
policies and procedures after certain policies are determined in the
ALM Meeting. The International and Treasury Administration Divisionof the consolidated banking subsidiary reduces the price fluctuation
risks through advance screening, establishing investment limits, andconstant monitoring. The Group holds most stocks for the purposeof business promotion and regularly monitors financial conditions ofissuers.
Such financial conditions of the issuers are regularly reported to
the Board of Directors and the ALM Meeting by the Risk Management
Division and the International and Treasury Administration Division.
The Risk Management Division and the International and Treasury
Administration Division monitor its market risk quantity of derivativetransactions relating to securities, currencies, and interest rates using
value at risk (“VaR”), and monitor its compliance with the aforementioned policies and procedures.

40

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014(iv) Derivative transactions
The consolidated banking subsidiary has established separate Divisions
to manage derivative transactions in order to achieve proper internal
controls. Each Division is separately responsible for executing the transactions, assessing effectiveness of the hedge transactions, or managing
business administration. It also engages the derivative transactions inaccordance with the aforementioned market risk management policies
and procedures.
(v) Market risk quantitative information
Financial instruments exposed to major risk factors, such as interest raterisk and price fluctuation risk, are mainly “Loans and bills discounted,”“Securities,” “Deposits,” “Negotiable certificates of deposit,” subordinate
debts of “Borrowed money,” and “Derivatives.” The Group performs
quantitative analysis on these financial instruments held by the consolidated banking subsidiary and utilizes its results to allocate risk capitaland control market risks. The Company and subsidiaries other than the
consolidated banking subsidiary do not perform quantitative analysis.
① Financial instruments held by the consolidated banking subsidiarya. “Loans and bills discounted,” yen-denominated bonds of “Securities,”“Deposits,” and “Negotiable certificates of deposit”
The consolidated banking subsidiary classifies its financial assets andfinancial liabilities into a fixed interest rate group and a floating interest
rate group in its quantitative analysis. In each group, the financial assets
and liabilities are disaggregated by each interest due date and analyzed
effects of interest fluctuations by period. If all risk factors, other thanan interest rate, are constant and the interest rate is assumed to be
increased by 10 basis points (0.10%), the net fair value of financial assets
after offsetting with financial liabilities decreases by ¥1,260 million($12,247 thousand). As previously mentioned, this net fair value amountis obtained assuming that all risk factors are constant except for theinterest rate, and no correlation between the interest rate and otherrisk factors was considered. If the interest rate fluctuates more than 10
basis points (0.10%), the impact may be greater than the net fair value
amount above.
The consolidated banking subsidiary considers those liquid
deposits of “Deposit” that have no activities for certain periods as “core”
deposits and manages the interest rate risk by categorizing them tomaturity periods of up to 10 years.
b. Financial instruments excepting a.
The Group performs quantitative analysis using VaR. For the calculationof VaR, the consolidated banking subsidiary uses the variance-covariance method (holding period: appropriate period depends on thenature of the instruments from one month to six months, confidence
interval: 99.0%, observation period: one year). The simple aggregated
VaR of each instrument is ¥30,460 million ($295,958 thousand) as ofMarch 31, 2014.
The Group carries out back testing to compare the VaR calculated
based on the above model with hypothetical profits and losses
calculated assuming that all positions were fixed at the point of therisk amount measurement. It should be noted that VaR measures theamount of market risk at certain probability levels statistically calculated
based on historical market fluctuations; therefore, there may be cases
where market risks cannot be captured in such situations when market
conditions are changing dramatically beyond what was historicallyexperienced.

② Financial instruments held by the Company and subsidiaries otherthan the consolidated banking subsidiary
Financial instruments held by the Company and subsidiaries other thanthe consolidated banking subsidiary, which are affected by interest risk,
are subordinate debts of “Borrowed money.” If all risk factors, other thanan interest rate, are constant, the fair value of the financial liabilities
decreases by ¥377 million ($3,666 thousand) when the interest rateincreases by 10 basis points (0.10%). As previously mentioned, this fairvalue amount is obtained assuming that all risk factors are constant
except for the interest rate, and no correlation between the interest rate
and other risk factors was considered. If the interest rate fluctuates morethan 10 basis points (0.10%), the impact may be greater than the fairvalue amount above.
(c) Liquidity risk management
The Group carries out adequate timely cash management throughthe ALM Meeting, and also manages the liquidity risks by diversifying
financing methods, and balancing long-term and short-term funding
with the consideration of market environment.
(4) Supplementary Explanation on Fair Values ofFinancial Instruments
The fair values of financial instruments are based on their market
prices and, in cases, where market prices are not readily available,reasonably calculated prices. Such prices have been calculated using
certain assumptions and may differ if calculated based on different
assumptions.
(5) Fair Values of Financial Instruments(a) Fair value of financial instruments

Millions of Yen
March 31, 2013

Carrying
amount(1) Cash and due from banks................................ ¥  197,870(2) Call loans and bills bought.............................. 129,460(3) Monetary claims bought..................................
8,661(4) Trading account securities —Securities held for trading purposes.........
4,288(5) Securities:
Held-to-maturity securities..............................
99,646
Available-for-sale securities............................. 1,085,314(6) Loans and bills discounted.............................. 3,775,974
Allowance for loan losses*1.............................
(42,830)
Net......................................................................... 3,733,143
Total assets.................................................................... ¥5,258,385(1) Deposits.................................................................... ¥4,745,811(2) Negotiable certificates of deposit................. 150,927(3) Payables under securities
lending transactions.........................................
71,951(4) Borrowed money................................................. 121,704
Total liabilities............................................................... ¥5,090,395
Derivative instruments*2 —Hedge accounting is not applied................. ¥      671Hedge accounting is applied..........................
(210)
Total derivative instruments.................................. ¥      461

Fair value

Unrealized
gains¥  197,870
129,460
8,661

¥   —
—
—

4,288

—

107,504
1,085,314

7,858—

3,776,651¥5,309,751¥4,751,630
151,00243,507¥51,365¥ 5,81874

71,951
124,114¥5,098,698—
2,409¥ 8,303¥      671
(210)¥      461¥    ——¥    —*1. A
 llowances for loan losses relevant to loans and bills discounted have been
deducted. Allowances for loan losses relevant to monetary claims bought are
excluded from the consolidated balance sheet amounts directly due to its
immateriality.
*2. D erivative instruments include derivative transactions both in other assets andliabilities. Derivative instruments are presented as net of assets and liabilities
associated with derivative transactions.

Millions of Yen
March 31, 2014

Carrying
amountFair value(1) Cash and due from banks................................ ¥  344,369 ¥  344,369(2) Call loans and bills bought..............................
1,520
1,520
(3) Monetary claims bought..................................
8,167
8,167
(4) Trading account securities —Securities held for trading purposes.........
4,266
4,266
(5) Securities:
Held-to-maturity securities..............................
97,695
105,638
Available-for-sale securities............................. 1,076,866 1,076,866(6) Loans and bills discounted.............................. 3,958,083
Allowance for loan losses*1.............................
(43,918)
Net......................................................................... 3,914,164 3,953,082
Total assets.................................................................... ¥5,447,051 ¥5,493,912(1) Deposits.................................................................... ¥4,943,137 ¥4,947,496(2) Negotiable certificates of deposit................. 171,040
171,100(3) Call money and bills sold..................................
6,175
6,175
(4) Payables under securities
lending transactions.........................................
5,965
5,965
(5) Borrowed money................................................. 180,644
181,947
Total liabilities............................................................... ¥5,306,963 ¥5,312,685
Derivative instruments*2 —Hedge accounting is not applied................. ¥      451 ¥      451Hedge accounting is applied..........................
(129)
(129)
Total derivative instruments.................................. ¥      322 ¥      322

Unrealized
gains¥    —
—
—
—
7,942
—

38,918¥46,860¥ 4,359
59
—
—
1,302
¥ 5,721¥    ——¥    —March 31, 2014

Thousands of U.S. Dollars
Carrying
Unrealized
amountFair value
gains(1) Cash and due from banks................................ $ 3,345,992(2) Call loans and bills bought..............................
14,776(3) Monetary claims bought..................................
79,362(4) Trading account securities —Securities held for trading purposes.........
41,451(5) Securities:
Held-to-maturity securities..............................
949,241
Available-for-sale securities............................. 10,463,146(6) Loans and bills discounted.............................. 38,457,863
Allowance for loan losses*1............................. (426,727)
Net......................................................................... 38,031,136
Total assets.................................................................... $52,925,104(1) Deposits.................................................................... $48,028,926(2) Negotiable certificates of deposit................. 1,661,882(3) Call money and bills sold..................................
60,000(4) Payables under securities
lending transactions.........................................
57,966(5) Borrowed money................................................. 1,755,194
Total liabilities............................................................... $51,563,968
Derivative instruments*2 —Hedge accounting is not applied................. $     4,390
Hedge accounting is applied..........................
(1,258)
Total derivative instruments.................................. $     3,131$ 3,345,992
14,77679,362$     ———

41,451—

1,026,411
10,463,146

77,170—38,409,277$53,380,415$48,071,283
1,662,461
60,000378,141$455,310$ 42,357
579—

57,966
1,767,851$51,619,560—
12,657$ 55,592$     4,390(1,258)$     3,131$     ——
$     —

*1. A
 llowances for loan losses relevant to loans and bills discounted have been
deducted. Allowances for loan losses relevant to monetary claims bought are
excluded from the consolidated balance sheet amounts directly due to its
immateriality.
*2. D erivative instruments include derivative transactions both in other assets andliabilities. Derivative instruments are presented as net of assets and liabilities
associated with derivative transactions.

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201441

Assets(1) Cash and due from banks
The carrying amounts of due from banks with no maturities approximate fair values. For due from banks with maturities, the carrying
amounts approximate fair values because they have short maturities of
one year or less.
(2) Call loans and bills bought
The carrying amounts of call loans and bills bought and monetaryclaims bought approximate fair values because they have short contract
terms of one year or less.

(2) Negotiable certificates of deposit
Refer to (1) Deposits.

(3) Monetary claims bought
Refer to (2) Call loans and bills bought.

(3) Call money and bills sold
The carrying amounts of call money and bills sold, and payables under
securities lending transactions approximate fair values because they
have short maturities of one year or less.

(4) Trading account securities
The fair values of securities held for trading purposes are measured
at the market price or the quoted price obtained from financial
institutions.

(4) Payables under securities lending transactions
Refer to (3) Call money and bills sold.

(5) Securities
The fair values of marketable equity securities are measured at thequoted market price of the stock exchange for equity instruments. Fairvalues of bonds are measured at the market price or the quoted priceobtained from financial institutions. Fair values of investment trusts aremeasured at the quoted price.
The fair values of private placement bonds are determined bydiscounting future cash flows at the rate that consists of the risk-freerate and the credit risk premium that corresponds to the internal credit
rating.
(6) Loans and bills discounted
The carrying amounts of loans and bills discounted with floatinginterest rates approximate fair value as long as customers’ credit risks
have not changed significantly after lending because the market rates
are promptly reflected in the floating interest rates.
The fair values of loans and bills discounted with fixed interest rates
are determined by discounting the principal and interest amount with
the interest rate used for new loans for each category of loan, internal
credit rating, and loan period. The carrying amounts of loans and bills
discounted with maturity less than one year approximate fair value
because of their short maturities.
For loans to obligors “legal bankruptcy,” “virtual bankruptcy,” and“possible bankruptcy,” a reserve is provided based on the discounted
cash flow method or based on amounts expected to be collected
through the disposal of collateral or execution of guarantees. The
carrying value net of the reserve as of the consolidated balance sheet
date is a reasonable estimate of the fair values of those loans.
The carrying amounts of loans and bills discounted that do nothave fixed maturities due to loan characteristics, such as limited loan
amounts within the value of pledged assets, approximate fair value dueto their expected repayment periods and interest rate conditions.

42

Liabilities(1) Deposits
The fair values of demand deposits are recognized as the payment
at the date of the consolidated balance sheet. The fair values of time
deposit and negotiable certificates of deposit are determined by discounting the contractual cash flows grouped by the remaining duration
at the rates that would be applied for similar new contracts.

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

(5) Borrowed Money
The fair value of borrowed money with fixed interest rates is determinedby discounting the principal and interest amount grouped by theremaining duration at the rate that would be applied for similar new
contracts. The carrying amount of borrowed money with maturity ofless than one year approximates fair value because of its short maturity
period.
Derivatives
Derivative transactions consist of interest rate derivatives (swaps),
currency derivatives (currency futures, options, and swaps), and bondderivatives (bond futures). The fair values of derivative instruments aremeasured at the market price or determined using the discounted cash
flow method or option-pricing model.
(b) Financial instruments whose fair value cannot be reliably determined
Carrying amount

Equity securities without readily
available market price*1*3........................
Investments in partnerships*2..................
Total.....................................................................

Millions of Yen
2014
2013

Thousands of
U.S. Dollars
2014¥1,482424¥1,907$14,408
4,121$18,529¥1,382567¥1,949*1. E quity securities without readily available market price are out of the scope ofthe fair value disclosure because their fair values cannot be reliably determined.
*2. Investments in partnerships, the assets of which comprise equity securities
without readily available market price, are out of the scope of the fair value
disclosure.
*3. D uring the years ended March 31, 2014 and 2013, impairment losses on equity
securities without readily available market price of ¥0 million ($10 thousand)and ¥1 million, respectively, were recognized.

(6) Maturity Analysis for Financial Assets and Liabilities with Contractual Maturities
March 31, 2014

Due from banks.....................................................................
Call loans and bills bought...............................................
Monetary claims bought...................................................
Securities:.................................................................................
Held-to-maturity securities........................................
Japanese national government bonds...........
Japanese corporate bonds...................................
Other..............................................................................
Available-for-sale securities
with contractual maturities.....................................
Japanese national government bonds...........
Japanese local government bonds..................
Japanese corporate bonds...................................
Other..............................................................................
Loans and bills discounted*1...........................................
Total............................................................................................

March 31, 2013

Due from banks.....................................................................
Call loans and bills bought...............................................
Monetary claims bought...................................................
Securities:.................................................................................
Held-to-maturity securities........................................
Japanese national government bonds...........
Japanese corporate bonds...................................
Other..............................................................................
Available-for-sale securities
with contractual maturities.....................................
Japanese national government bonds...........
Japanese local government bonds..................
Japanese corporate bonds...................................
Other..............................................................................
Loans and bills discounted*2...........................................
Total............................................................................................

March 31, 2014

Due from banks.....................................................................
Call loans and bills bought...............................................
Monetary claims bought...................................................
Securities:.................................................................................
Held-to-maturity securities........................................
Japanese national government bonds...........
Japanese corporate bonds...................................
Other..............................................................................
Available-for-sale securities
with contractual maturities.....................................
Japanese national government bonds...........
Japanese local government bonds..................
Japanese corporate bonds...................................
Other..............................................................................
Loans and bills discounted*1...........................................
Total............................................................................................

Due in one year
or less

Millions of Yen
Due after one year Due after three years Due after five years Due after five years
through three years through five years through seven years through 10 years

Due after 10 years¥  285,430
1,520
8,180
194,735
2,000
—
1,000
1,000

¥       ——
—248,956
21,000—7,000
14,000¥     ———
148,871
2,000
—
2,000
—

¥     ———
78,611
23,00023,000——¥     ———
224,365————¥       ——
—161,545
50,00050,000——192,735
40,70061,847
84,187
6,000
906,460¥1,396,327

227,956
40,00051,397
95,283
41,275786,311¥1,035,267

146,870
30,00039,96335,49741,408
512,815¥661,685

55,611
25,00029,653957—
329,066¥407,677

224,365
145,000
69,073—
10,292385,609¥609,974

111,545
70,000—41,545—
874,617¥1,036,162

Due in one year
or less

Millions of Yen
Due after one year Due after three years Due after five years Due after five years
through three years through five years through seven years through 10 years

Due after 10 years¥  197,870
129,460
8,664
213,877
1,000
—
—
1,000

¥       ——
—334,612
10,000
—
8,000
2,000

¥     ———
198,492
16,000—2,000
14,000¥     ———
51,167
7,000
7,000
—
—

¥     ———
170,527
16,00016,000——¥     ———
120,775
50,00050,000——212,877
35,000117,240
60,636—
948,494¥1,498,367

324,61250,70095,771
143,12035,021
705,874¥1,040,486

182,492
60,00050,67947,22924,583546,371¥744,864

44,16720,00022,0082,159—
267,874¥319,041

154,527
135,000
18,117—1,410
359,223¥529,750

70,77550,000—20,775—779,217¥899,992

Due in one year
or less

Thousands of U.S. Dollars
Due after one year Due after three years Due after five years Due after five years
through three years through five years through seven years through 10 years

Due after 10 years$ 2,773,320
14,776
79,488
1,892,103
19,433
—
9,716
9,716

$        —
——2,418,928
204,042—
68,014136,028$       ——
—1,446,465
19,433—
19,433—$       ——
—763,811
223,475
223,475——$       ——
—2,179,995————$        —
——1,569,618
485,814
485,814——

1,872,670
395,453
600,929
817,990
58,2988,807,430$13,567,118

2,214,886
388,651499,395
925,798
401,0427,640,022$10,058,950

1,427,033
291,489388,298
344,907402,340
4,982,657$6,429,122

540,336
242,907
288,123
9,306—
3,197,299$3,961,109

2,179,995
1,408,861
671,134—
100,000
3,746,687$5,926,682

1,083,804
680,140—
403,664—
8,498,028$10,067,645*1. As of March 31, 2014, loans and bills discounted with no contractual maturities amounting to ¥103,313 million ($1,003,824 thousand) and loans and bills discounted
whose cash flow cannot be estimated, such as “legal bankruptcy,” “virtual bankruptcy,” and “possible bankruptcy” loans, amounting to ¥70,899 million ($688,879
thousand) are not included.
*2. As of March 31, 2013, loans and bills discounted with no contractual maturities amounting to ¥100,595 million and loans and bills discounted whose cash flow cannot be
estimated, such as “legal bankruptcy,” “virtual bankruptcy” and “possible bankruptcy” loans, amounting to ¥82,575 million are not included.

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201443

March 31, 2014

Due in one year
or less

Deposits*1..........................................................................................................................
Negotiable certificates of deposit..........................................................................
Borrowed money*2.......................................................................................................
Total.....................................................................................................................................

¥4,474,995
171,040
41,144¥4,687,180

March 31, 2013

Due in one year
or less

Deposits*1..........................................................................................................................
Negotiable certificates of deposit..........................................................................
Borrowed money*3.......................................................................................................
Total.....................................................................................................................................

¥4,222,302
150,927
111,704¥4,484,934

March 31, 2014

Due in one year
or less

Deposits*1..........................................................................................................................
Negotiable certificates of deposit..........................................................................
Borrowed money*2.......................................................................................................
Total.....................................................................................................................................

$43,480,325
1,661,882
399,772$45,541,979

Millions of Yen
Due after one year Due after three years Due after five years Due after seven years
through three years through five years through seven years through 10 years¥390,309—
59,500¥449,809¥ 74,944—
40,000¥114,944¥ 1,519—30,000¥31,519¥1,370——¥1,370Millions of Yen
Due after one year Due after three years Due after five years Due after seven years
through three years through five years through seven years through 10 years¥438,254——¥438,254¥82,006——¥82,006¥1,915——¥1,915¥1,334——¥1,334

Thousands of U.S. Dollars
Due after one year Due after three years Due after five years Due after seven years
through three years through five years through seven years through 10 years$3,792,353—
578,119$4,370,472$  728,177—
388,651$1,116,829$ 14,759—
291,489$306,248$13,311——$13,311*1. The cash flow of demanded deposits is included in “Due in one year or less.”*2. As of March 31, 2014, perpetual subordinated borrowings with no contractual maturities amounting to ¥10,000 million ($97,163 thousand) is not included.
*3. As of March 31, 2013, perpetual subordinated borrowings with no contractual maturities amounting to ¥10,000 million is not included.

21. DERIVATIVE INFORMATION
Derivative Transactions to Which Hedge Accounting Is Not Applied at March 31, 2014 and 2013
With respect to derivatives to which hedge accounting is not applied, contract amount or notional principal, fair value and the related valuation
gains (losses) at the fiscal year end date by transaction type and valuation method of fair value are as follows: Note that contract amounts do not
represent the market risk exposure associated with derivatives.
Consolidated banking subsidiary had the following derivative contracts, which were quoted on listed exchanges, outstanding as of March 31, 2014
and 2013, as follows:

March 31, 2014

Contract
amountBond contracts —Futures written............................................

¥3,908March 31, 2013

Contract
amountBond contracts —Futures written............................................

¥870

Millions of Yen
Contract amountdue after
Fair
one year
value

¥—

¥3

Millions of Yen
Contract amountdue after
Fair
one year
value

¥—

¥(2)

Unrealized
gains/losses

Contract
amount¥3$37,974

Thousands of U.S. Dollars
Contract amountdue after
Fair
one year
value

$—

$34

Unrealized
gains/losses$34

Unrealized
gains/losses¥(2)

Notes: 1. The transactions above are stated at fair value and the related valuation gains (losses) is reported in the consolidated statements of income.
2. Fair values of transactions listed on exchange are calculated using the last quoted market price at the Osaka Financial Exchange (Tokyo Exchange in 2013).

44

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

Consolidated banking subsidiary had the following derivative contracts, which were not quoted on listed exchanges, outstanding as of March 31, 2014
and 2013, as follows:

March 31, 2014

Interest rate contracts:
Interest rate swaps:
Receive fixed and pay floating........
Foreign exchange:
Currency swaps...........................................
Forward exchange
contracts written......................................
Forward exchange
contracts purchased...............................
Total........................................................................

March 31, 2013

Foreign exchange:
Currency swaps...........................................
Forward exchange
contracts written......................................
Forward exchange
contracts purchased...............................
Total........................................................................

Contract
amountMillions of Yen
Contract amountdue after
Fair
one yearvalue

Unrealized
gains/losses

Contract
amountThousands of U.S. Dollars
Contract amountdue after
Fair
one yearvalue

Unrealized
gains/losses¥    200¥    200

¥  0

¥  0

$    1,943$    1,943$    5$    5

248,624

168,917448

448

2,415,707

1,641,249

4,357

4,357

2,304

—

(3)

(3)

22,390

—

(31)

(31)

800
—

—
—

2
¥447

2
¥447

7,775
—

—
—

25
$4,35025$4,350Contract
amountMillions of Yen
Contract amountdue after
Fair
one yearvalue

Unrealized
gains/losses¥280,843¥224,159

¥648

¥648

3,413

—

(23)

(23)

680
—

—
—

48
¥674

48
¥674

Notes: 1. The transactions above are stated at fair value and the related valuation gain (loss) is reported in the consolidated statements of income.
2 .Fair values of transactions above are calculated using the discounted present value method.

Derivative Transactions to Which Hedge Accounting Is Applied at March 31, 2014 and 2013
With respect to derivatives to which hedge accounting is applied, contract amount or notional principal and fair value at the fiscal year end date bytransaction type and hedge accounting method and valuation method of fair value are as follows: Note that contract amounts do not represent themarket risk exposure associated with derivatives.
Consolidated banking subsidiary had the following derivative contracts, which were not quoted on listed exchanges, outstanding as of March 31,
2014 and 2013, as follows:

March 31, 2014

Hedged Item

Interest rate contracts:
Interest rate swaps:
Receive fixed and pay floating........Bonds (available-for-sale securities)
Foreign exchange:
Loans, deposits, due from banks,etc., which are denominatedForward exchange contracts................. in foreign currencies

March 31, 2013

Hedged Item

Interest rate contracts:
Interest rate swaps:
Receive fixed and pay floating........Bonds (available-for-sale securities)

Contract
amountMillions of Yen
Contract amountdue after
one year

Fair
value

Thousands of U.S. Dollars
Contract amountdue after
Fair
Contract
one yearvalue
amount¥50,000¥50,000¥(56)$485,814$485,814$(547)

10,292—(73)

100,000—(711)

Contract
amountMillions of Yen
Contract amountdue after
one year

Fair
value

¥50,000¥50,000¥(210)

Notes: 1. These derivatives are accounted for using the deferred hedge accounting.
2. Fair values of transactions above are calculated using the discounted present value method.

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201445

22. OTHER COMPREHENSIVE (LOSS) INCOME
The components of other comprehensive (loss) income for the years
ended March 31, 2014 and 2013 were as follows;
Millions of Yen
2014
2013

Unrealized gain
on available-for-sale securities
Gains arising during the year..............
Reclassification adjustments
to profit or loss........................................
Amount before
income tax effect.............................
Income tax effect...............................
Total.....................................................................
Deferred losses on hedges
Gains arising during the year..............
Reclassification adjustments
to profit or loss........................................
Amount before
income tax effect.............................
Income tax effect...............................
Total.....................................................................
Total other comprehensive(loss) income.................................................

Thousands of
U.S. Dollars
2014¥10,086¥22,124$ 98,001(11,967)(4,356)(116,276)(1,880)156¥ (1,724)

17,767(4,797)¥12,969(18,274)
1,518$ (16,756)¥    (79)¥    (278)$    (771)

236

73

2,299

157
(55)
¥   101(205)
72¥   (132)

1,528
(540)
$    987¥ (1,622)¥12,837$ (15,769)

23. SEGMENT INFORMATION
For the years ended March 31, 2014 and 2013
Under the ASBJ revised ASBJ Statement No. 17, “Accounting Standard
for Segment Information Disclosures” and issued ASBJ Guidance No.
20, “Guidance on Accounting Standard for Segment Information
Disclosures.” Under the standard and guidance, an entity is required toreport financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregationsof operating segments that meet specified criteria. Operating segments
are components of an entity about which separate financial information
is available and such information is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and inassessing performance. Generally, segment information is required tobe reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources tooperating segments.
The Group engages in the business of banking and other related
activities, such as credit card. Segment information is not disclosed due
to immateriality of businesses other than banking.
Other segment related information:1) Information by services
March 31, 2014

Millions of Yen
Lending Investment
operations operations
Other

Ordinary income
from external customers.............. ¥57,751

March 31, 2013¥14,873¥23,881

Thousands of U.S. Dollars
Lending Investment
operations operations
Other

Ordinary income
from external customers.............. $561,130

46¥25,089 ¥108,069

Millions of Yen
Lending Investment
operations operations
Other

Ordinary income
from external customers.............. ¥59,634

March 31, 2014¥25,228$245,128ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

Total

Total

¥98,389

Total$243,772 $1,050,030

2) Information by geographic region
Since the ordinary income and total tangible fixed assets attributable
to the “Japan” segment account for more than 90% of the total of allgeographic segments, geographical segment information has not beenpresented.
3) Information by major customers
Since there has been no specific customer to which the Groupsells more than 10% of total ordinary income on the consolidated
statements of income, information on major customers has not beenpresented.
4) Information on loss on impairment of fixed assets by reportablesegment
Information on loss on impairment of fixed assets is not disclosed due
to immateriality.
5) Information on amortization and unamortized balance of goodwill byreportable segment
Information on amortization and unamortized balance of goodwill is
not disclosed due to immateriality.
6) Information on gain on negative goodwill by reportable segment
Not applicable.

24. RELATED PARTY TRANSACTIONS
Related party transactions for the years ended March 31, 2014 and 2013
were as follows:(1) Transactions between the Company and its related parties
a. Company and major share holders
There was no applicable transaction to be reported for the years ended
March 31, 2014 and 2013b. Unconsolidated subsidiaries and affiliates
There was no applicable transaction to be reported for the years ended
March 31, 2014 and 2013c. Companies that are owned by the same parent company with theCompany and other affiliates’ subsidiaries
There was no applicable transaction to be reported for the years ended
March 31, 2014 and 2013
d. Directors or major individual shareholders
There was no applicable transaction to be reported for the years ended
March 31, 2014 and 2013

(2) Transactions between subsidiaries of the Company and its related parties
a. Company and major shareholders
There was no applicable transaction to be reported for the years ended March 31, 2014 and 2013b. Unconsolidated subsidiaries and affiliates
There was no applicable transaction to be reported for the years ended March 31, 2014 and 2013c. Companies that are owned by the same parent with the Company and other affiliates’ subsidiaries
There was no applicable transaction to be reported for the years ended March 31, 2014 and 2013
d. Directors or major individual shareholders
Year ended March 31, 2014
Type

Name

Company whose voting ITATSU CO.,rights are majority owned LTD.*2*3by a director or its close Ryomo Seihin
relatives
Toso Co., Ltd.*2*4

Transaction
amountTransactions (Millions of Yen)*1

Location

Capital(Millions of Yen)

Business

Ownerships

RelationshipTochigi¥30

Wholesale

None

Loans

Loan

¥582

Gunma

20

Manufacturing

None

Loans

Loan

22

Account

Loans and bills
discounted
Loans and bills
discounted

Outstandingbalance(Millions of Yen)

¥659
20

Terms and conditions on transactions and transaction policy:
Notes: 1. Transaction amounts were reported at the average balance for the period.
2. The interest rate on loans is reasonably determined considering the market rate.
3. Company whose voting rights are majority owned by a close relative of Mr. Toshio Itabashi, an outside director of the Company.
4. Company whose voting rights are majority owned by ITATSU Co., LTD.
5. Transaction amounts do not include consumption taxes.

Year ended March 31, 2013
Type

Name

Company whose voting ITATSU CO.,rights are majority owned LTD.*2*3by a director or its close Ryomo Seihin
relatives
Toso Co., Ltd.*2*4

Location

Capital(Millions of Yen)

Business

Ownerships

RelationshipTransaction
amountTransactions (Millions of Yen)*1

Tochigi¥30

Wholesale

None

Loans

Loan

¥585

Gunma

20

Manufacturing

None

Loans

Loan

18

Account

Loans and bills
discounted
Loans and bills
discounted

Outstandingbalance(Millions of Yen)

¥651
26

Terms and conditions on transactions and transaction policy:
Notes: 1. Transaction amounts were reported at the average balance for the period.
2. The interest rate on loans is reasonably determined considering the market rate.
3. Company whose voting rights are majority owned by a close relative of Mr. Toshio Itabashi, an outside director of the Company.
4. Company whose voting rights are majority owned by ITATSU Co., LTD.
5. Transaction amounts do not include consumption taxes.

Year ended March 31, 2014

Type

Name

Company whose voting ITATSU CO.,rights are majority owned LTD.*2*3by a director or its close Ryomo Seihin
relatives
Toso Co., Ltd.*2*4

Location

Capital(Thousands of
U.S. Dollars)

Business

Ownerships

RelationshipTransactions

Transaction
amount(Thousands of
U.S. Dollars)*1

Tochigi$291

Wholesale

None

Loans

Loan

$5,660

Gunma

194

Manufacturing

None

Loans

Loan

222

Account

Loans and bills
discounted
Loans and bills
discounted

Outstandingbalance(Thousands of
U.S. Dollars)$6,407
194

Terms and conditions on transactions and transaction policy:
Notes: 1. Transaction amounts were reported at the average balance for the period.
2. The interest rate on loans is reasonably determined considering the market rate.
3. Company whose voting rights are majority owned by a close relative of Mr. Toshio Itabashi, an outside director of the Company.
4. Company whose voting rights are majority owned by ITATSU Co., LTD.
5. Transaction amounts do not include consumption taxes.

25. SUBSEQUENT EVENTS
Not applicable.

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

47

48

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

Non-Consolidated Financial Statements

Non-Consolidated Balance Sheet
March 31, 2014 (unaudited)

The Ashikaga Bank, Ltd.

Millions of Yen
2014
2013

Thousands of
U.S. Dollars
2014

ASSETS:Cash and due from banks...................................................................................................................
Call loans and bills bought.................................................................................................................
Monetary claims bought.....................................................................................................................
Trading account securities.................................................................................................................
Securities........................................................................................................................................................
Loans and bills discounted.................................................................................................................
Foreign exchange....................................................................................................................................
Tangible fixed assets..............................................................................................................................
Intangible fixed assets...........................................................................................................................
Prepaid pension cost.............................................................................................................................
Deferred tax assets..................................................................................................................................
Customers’ liabilities for acceptances and guarantees....................................................
Other assets.................................................................................................................................................
Allowance for loan losses....................................................................................................................
Total...........................................................................................................................................................

¥  344,367
1,520
8,180
4,266
1,205,418
4,007,311
5,969
24,536
4,739
2,955
2,219
15,333
15,142(40,715)¥5,601,246¥  197,868
129,460
8,664
4,288
1,215,856
3,775,220
7,451
25,063
5,991
1,879
3,025
17,274
15,923(38,985)¥5,368,984$ 3,345,971
14,776
79,48841,451
11,712,189
38,936,182
58,000238,405
46,04828,71921,562
148,988
147,125(395,601)$54,423,304

LIABILITIES AND EQUITY
LIABILITIES:
Deposits.........................................................................................................................................................
Negotiable certificates of deposit..................................................................................................
Call money and bills sold.....................................................................................................................
Payables under securities lending transactions....................................................................
Borrowed money......................................................................................................................................
Foreign exchanges..................................................................................................................................
Other liabilities...........................................................................................................................................
Provision for directors’ bonuses......................................................................................................
Liability for retirement benefits.......................................................................................................
Provision for directors’ retirement benefits.............................................................................
Provision for reimbursement of deposits..................................................................................
Provision for contingent loss............................................................................................................
Provision for point card certificates..............................................................................................
Provision for loss on disaster.............................................................................................................
Acceptances and guarantees...........................................................................................................
Total liabilities......................................................................................................................................

¥4,957,892
226,040
6,175
5,965
100,644763
26,812
21
812
86
1,606
424
51
—
15,333¥5,342,632¥4,782,156
180,927—
71,951
41,704550
27,355
27
1,260
130
1,518
326
37
70
17,274¥5,125,291$48,172,295
2,196,278
60,00057,966
977,891
7,418
260,521
210
7,899
844
15,604
4,126
496—
148,988$51,910,535¥  135,000$ 1,311,698

9,383
73,919218,302

119,829
858,965
2,290,492

25,522(132)
25,390243,693¥5,368,984

222,578(301)
222,277
2,512,769$54,423,304

EQUITY:
Common stock¥  135,000
Retained earnings:
Legal retained earnings.................................................................................................................
12,332Other retained earnings................................................................................................................
88,404
Total shareholders’ equity.....................................................................................................
235,737
Valuation adjustments:
Unrealized gains on available-for-sale securities...........................................................
22,907
Deferred losses on hedges..........................................................................................................
(30)
Total valuation adjustments................................................................................................
22,876
Total equity.............................................................................................................................
258,614TOTAL...................................................................................................................................................................... ¥5,601,246

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201449

Non-Consolidated Statement of Income
Year Ended March 31, 2014 (unaudited)

The Ashikaga Bank, Ltd.

Millions of Yen
2014
2013

INCOME:Interest income:Interest on loans and bills discounts.....................................................................................
Interest and dividends on securities......................................................................................
Interest on call loans and bills bought.................................................................................
Interest on deposits with banks...............................................................................................
Other interest income....................................................................................................................
Fees and commissions..........................................................................................................................
Other operating income......................................................................................................................
Other income..............................................................................................................................................
Total income..................................................................................................................................
EXPENSES:Interest expenses:
Interest on deposits.........................................................................................................................
Interest on negotiable certificates of deposit..................................................................
Interest on call money and bills sold....................................................................................
Interest on payables under securities lending transactions...................................
Interest on borrowed money....................................................................................................
Other interest expenses................................................................................................................
Fees and commissions payments..................................................................................................
Other operating expenses..................................................................................................................
General and administrative expenses.........................................................................................
Provision of allowance for loan losses.........................................................................................
Other expenses..........................................................................................................................................
Total expenses..............................................................................................................................
INCOME BEFORE INCOME TAXES........................................................................................................
INCOME TAXES:
Current............................................................................................................................................................
Deferred.........................................................................................................................................................
Total income taxes....................................................................................................................
NET INCOME.......................................................................................................................................................

50

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

Thousands of
U.S. Dollars
2014¥ 55,574
10,630204
187
10520,1893,114
14,988104,995¥56,648
8,749
305
146
108
17,9686,185
4,374
94,486$  539,979
103,291
1,986
1,825
1,027
196,163
30,264
145,630
1,020,164

2,493
169
19
62
80
19
5,840
1,331
49,931
6,749
3,295
69,99335,002

2,909
171
3
14
73
4
5,836
—
50,542
2,878
5,367
67,801
26,68424,228
1,644
189
610
786
186
56,75012,935
485,145
65,57832,022680,073
340,090

2,158
663
2,821
¥ 32,180

1,074
965
2,040
¥24,644

20,9706,447
27,416$  312,674

Non-Consolidated Statement of Changes in Equity
Year Ended March 31, 2014 (unaudited)

The Ashikaga Bank, Ltd.

Commonstock

BALANCE, APRIL 1, 2012............................................................................. ¥135,000
Net income....................................................................................................
—Cash dividends............................................................................................
—Net changes except for shareholders’ equity
during the year.........................................................................................
—Net change in the year..........................................................................
—BALANCE, MARCH 31, 2013...................................................................... 135,000
Net income....................................................................................................
—Cash dividends ..........................................................................................
—Net changes except for shareholders’ equity
during the year.........................................................................................
—Net change in the year..........................................................................
—BALANCE, MARCH 31, 2014...................................................................... ¥135,000

Millions of Yen
Retained earnings
Unrealized
Legal
Other
gains onretainedretained
available-forearnings
earnings
sale securities

Deferred
losseson hedges

Total
equity¥ 6,434—
2,949¥66,969
24,644(17,694)¥13,052
—
—

¥ —
—
—

¥221,457
24,644(14,745)

—
2,949
9,383
—
2,949

—
6,949
73,91932,180(17,694)

12,46912,46925,522
—
—

(132)
(132)
(132)
—
—

12,337
22,235
243,693
32,180(14,745)—
2,949¥12,332—
14,485¥88,404(2,615)(2,615)¥22,907101
101¥ (30)(2,513)
14,921¥258,614

Thousands of U.S. Dollars
Retained earnings

Commonstock

BALANCE, MARCH 31, 2013...................................................................... $1,311,698
Net income....................................................................................................
—Cash dividends ..........................................................................................
—Net changes except for shareholders’ equity
during the year.........................................................................................
—Net change in the year..........................................................................
—BALANCE, MARCH 31, 2014...................................................................... $1,311,698

Legalretainedearnings

Otherretainedearnings

Unrealized
gains onavailable-forsale securities

Deferred
losseson hedges

Total
equity$ 91,174—
28,655$718,220312,674(171,928)$247,987——$(1,289)——$2,367,791
312,674(143,274)—
28,655$119,829—
140,745$858,965(25,409)(25,409)$222,578

987
987$  (301)(24,421)
144,979$2,512,769

ASHIKAGA HOLDINGS CO., LTD. Annual Report 201451

Corporate Data
Ashikaga Holdings Co., Ltd.

The Ashikaga Bank, Ltd.

Trade name:Trade name:

Ashikaga Holdings Co., Ltd.

The Ashikaga Bank, Ltd.

Representative:	‌Masanao Matsushita,
President and Chief Executive Officer

Representative:	‌Masanao Matsushita,
President and Chief Executive Officer

Established:

April 1, 2008

Founded:Paid in capital:¥117,495 million

Paid in capital:	‌¥135,000 million(The Ashikaga Bank, Ltd. is a wholly owned
subsidiary of Ashikaga Holdings Co., Ltd.)

Address of head office:	‌1-25, Sakura 4-chome, Utsunomiya,Tochigi Prefecture

October 1, 1895

Address of head office:	‌1-25, Sakura 4-chome, Utsunomiya,Tochigi Prefecture
Number of employees: 3,006 (as of March 31, 2014)
Consolidated Subsidiaries:	Ashikaga Credit Guarantee Co., Ltd.
Ashigin Research Institute, Ltd.
Ashigin Card Co., Ltd.

Organization (as of April 1, 2014)
Ashikaga Holdings Co., Ltd.
Shareholder’s Meeting
Board of Directors
Executive Officers

Executive Appointment Committee
Audit Committee

Corporate Planning Department

Planning GroupTokyo Liaison Office Group

Office of Audit Committee

Public and Investor Relations Group

Compensation Committee

Accounting Group

Business Administration Department

Personnel Group
General Affairs Group
Risk Management Group
Compliance Management Group

Auditing Department

The Ashikaga Bank, Ltd.
Shareholder’s Meeting
Board of Directors
Executive Officers

Executive Appointment Committee
Audit Committee
Office of Audit Committee
Compensation Committee

Business Promotion Division

Operation Planning Division

Solution Business Office

Operation Support Division

Consulting Business Office

IT Planning and Administration Division

Business Planning Division

Management Planning Division

Personal Loan Business DivisionTokyo Liaison Office

Regional Development Division

Public Relations OfficeTreasury and Securities DivisionInternational and Treasury Administration Division

Personnel Division
In-house Training Office

Loan Supervision Division

General Affairs Office

Credit Supervision Division I

Risk Management Division

Credit Supervision Division II

Compliance Management DivisionInternal Audit Division

17 Divisions and 6 Offices (As of April 1, 2014)52

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

Area Hubs
Customer
BranchesList of Directors and Executive Officers (as of June 26, 2014)
Ashikaga Holdings Co., Ltd.
Directors

Executive Officers

Director

Satoshi Fujisawa

Chairman and Chief Executive Officer

Satoshi Fujisawa

Director

Masanao Matsushita *1,*2

President and Chief Executive Officer

Masanao Matsushita

Director

Kunihiro Ono *3
Masataka Komata

Executive Officer(General Manager of Corporate Planning Department)

Kiyoshi Kato

Director
Outside Director

Shinjiro Takagi *1,*2

Mitsuo Sugiyama

Outside Director

Yoshio Kohra *3

Executive Officer(General Manager of Auditing Department)

Outside Director

Toshio Itabashi *2,*3

Outside Director

Shoji Fukui *1,*2

Kazuyuki Shimizu
Executive Officer(General Manager of Business Administration Department)

The Ashikaga Bank, Ltd.
Directors

Executive Officers

Director

Masanao Matsushita *1,*2

President and Chief Executive Officer

Masanao Matsushita

Director

Kunihiro Ono

Director

Managing Executive Officer(General Manager of Management Planning Division)

Kiyoshi Kato

Masataka Komata *3

Outside Director

Shinjiro Takagi *1,*2

Managing Executive Officer

Yutaka Horie

Outside Director

Yoshio Kohra *3

Managing Executive Officer

Hiroshi Mori

Outside Director

Toshio Itabashi *2,*3

Executive Officer

Mitsuo Sugiyama

Outside Director

Shoji Fukui *1,*2

Executive Officer(Chief Officer of Ken’ou and Nikko Area Hub)

Zenichi Komaba

Executive Officer

Hideo Saito

Executive Officer

Takashi Satake

Executive Officer

Keizo Shinozaki

Executive Officer

Kazuyuki Shimizu

Directors shown above belong to *1: Executive Appointment
Committee, *2: Compensation Committee, *3: Audit Committee

Stock Information (as of March 31, 2014)
Number of shares:

333,250 thousands (issued)

Number of shareholders: 14,687
Term-end:

End of March

Stock exchange listing:	‌Tokyo Stock Exchange(First section code: 7167)
Unit of Trading:

100 shares

Principal shareholders (top ten)
Shareholding%(thou. shares) shareholding

Shareholder

Nomura Financial Partners Co., Ltd.
Ashikaga Next Investment Limited Partnership
NORTHERN TRUST CO. (AVFC) RE 15PCT TREATY ACCOUNTJAFCO Super V-3 Investment Limited Partnership
NIPPONKOA Insurance Company, Limited
Mitsui Sumitomo Insurance Company, Limited
BNY FOR GCM CLIENT ACCOUNTS (E) BD
National Mutual Insurance Federation of Agricultural Cooperatives
Nippon Life Insurance Company
Seven Bank, Ltd.
Sompo Japan Insurance Inc.

122,900
53,00016,88815,00015,00015,000
6,198
5,623
5,000
4,000
4,000

36.87
15.90
5.06
4.50
4.50
4.50
1.86
1.68
1.50
1.20
1.20

Note: % shareholdings are expressed to second decimal places

ASHIKAGA HOLDINGS CO., LTD. Annual Report 2014

53

ASHIKAGA HOLDINGS CO., LTD.

Annual Report 2014

Printed in Japan